Housing affordability worsened across most major Canadian markets in April as rising mortgage rates increased borrowing costs for homebuyers, according to a report from Ratehub.ca.
The report found affordability deteriorated in 12 of the 13 housing markets analyzed as the average five-year fixed mortgage rate rose to 4.47 per cent from 4.39 per cent in March. The average mortgage stress test rate also increased to 6.47 per cent.
While some markets experienced rising home prices, Ratehub.ca said affordability also remained under pressure in cities where prices softened.
That included Montreal, where slightly lower home prices did not translate into meaningful affordability gains because higher mortgage rates increased borrowing costs.
“Even in markets where home prices softened slightly, like Vancouver, Montreal and Halifax, affordability still failed to meaningfully improve because higher mortgage rates continued to increase borrowing costs,” the report said.
In Quebec’s Eastern Townships, real estate agent Charles-Édouard Séguin said demand remains strong despite rising prices and affordability concerns.
“It’s something special because today, real estate is like on fire, because there is a lot of buying and a lot of selling in the real estate market,” he said. “We see a lot of people from out of town coming in, like, ‘Oh, maybe,’ but then they buy some cottages, and there are a lot of sales. But pricing is just going up, and everyone wants to invest here. So it’s a very tight market.”
He said even what he considers “reasonable” housing has become increasingly expensive.
“A house is like $500,000 at least for something reasonable. And the price is just going up, and you see rent at about $2,000 each month,” he said. “I don’t know what’s going to happen in the future, but a lot of new buyers are stuck between renting a good house or buying one. They need some help because prices are very high right now.”
He added that many first-time buyers are relying on outside support to enter the market.
“If somebody wants to buy today, you need some help, like from a parent or by having a couple of extra jobs, because prices keep going up for new buyers,” he said.
Rising prices are also affecting buyer sentiment, particularly among younger households.
“They have a dream. They want to buy a house, you know, to build a family and everything,” Séguin said. “And when you see today’s prices, if you go back just five years, they’ve gone way up. So they need to maybe rent. They are discouraged.”
He said he continues to encourage clients to seek support and remain flexible.
“I suggest they always try to get some help with the price because I don’t want them to be stuck in this market,” he said.
The strain is not limited to first-time buyers. Some long-time homeowners are also adjusting their housing plans.
“I get some older people who are getting older and want to go into renting. And when they do, they are very surprised,” Séguin said. “It just costs a lot of money today to have a house.”
Beyond purchase prices, ongoing costs are also weighing on households.
“You pay for the house, but after that you have a lot of fees to pay, you know, and the time you put into the house,” he said. “So yes, a lot of people are selling and moving into a smaller apartment because they no longer have time to put into the house.”
Séguin said affordability pressures are especially visible in Montreal and surrounding areas, where prices in some segments have climbed sharply.
“When I go to Montreal, I have some friends and clients there, and they tell me the condos, the buildings, everything, it’s close to a million,” he said.
He added that younger buyers without strong incomes or family support are increasingly shut out of ownership.
“If they don’t have help or a good job, I don’t know how they can buy,” he said. “That’s why a lot of young people right now stay in apartments or stay at their parents’ homes.”
Economist Moshe Lander said the current housing challenges did not begin with the pandemic, but reflect a long-term imbalance between wages and home prices.
“It’s not just since COVID. It’s been happening since the turn of the century,” he said. “Housing prices are rising faster than our incomes. So in 2000, whatever our incomes were and whatever housing we could buy, now in 2026 we can buy about half what we could back then.”
He said COVID-19 accelerated existing pressures, but did not create them.
“COVID was certainly a pivot point, but it was something that had already been happening before,” he said.
Lander pointed to weak competition in parts of the economy and limited housing supply as core drivers of affordability pressures.
“Many industries in Canada are not productive or not competitive,” he said. “If I don’t worry that somebody’s coming to take my customers, I don’t invest in my staff.”
He used the return of U.S. chain Dunkin’ Donuts as an example of how competition can influence wages and service standards.
“If we want to steal Tim Hortons’ customers, we need to make sure that orders are done on time, with a smile, the restaurants are clean,” he said. “That would allow workers to get more money because Tim Hortons and Dunkin’ are now going to compete with you to make you your best self.”
On housing supply, he said zoning rules play a central role in limiting construction.
“If I want to build some property on this spot of land, the city controls whether it is a single home or a duplex or a high rise,” he said. “If they say you can only build a single home, then I can only house one family. But if they say you can build 500 units, now I can house 500 people.”
He added that local resistance often slows development.
“People say… wait a second, if you build 500 houses, that’s going to bring down the prices of all houses, including mine,” he said.
Lander said responsibility for housing pressures is often misunderstood.
“The housing part of the story is municipal,” he said. “If we’re not looking at our municipal city councillors and mayors and saying, ‘Hey, you’re responsible for this,’ then we’re focusing on the wrong people.”
He also argued that federal policy has limited impact on housing supply directly, though it influences competition and wages.
Lander added that recent federal measures aimed at helping first-time buyers, such as tax-related relief, do not address the core issue of affordability.
“I don’t need help buying the home by giving me a GST credit. I need to come up with the down payment,” he said.
He added that stagnant income growth makes saving increasingly difficult.
“Because your income is not rising as fast as it could be, you don’t have as much money left over to put into savings,” he said.
Lander warned that meaningful improvement in affordability will take time.
“If it took 25 years to get to this mess, then presumably it’s 25 years to get out of the mess,” he said. “There’s probably an entire generation, between the ages of 15 and 40, that if you don’t have a home now, there’s a good chance you’re not.”
Ratehub.ca said broader economic conditions continue to shape affordability, with borrowing costs remaining a key driver of pressure on buyers.
The report noted that after a series of rate cuts beginning in 2024, the Bank of Canada held its overnight rate steady at 2.25 per cent in April. It added that higher Government of Canada bond yields have put upward pressure on fixed mortgage rates, with lenders increasing rates by roughly 25 to 40 basis points.
Lenders have increased fixed mortgage rates by roughly 25 to 40 basis points, making borrowing more expensive than earlier this year.
Despite affordability pressures, national home prices have continued to soften.
According to data cited by Ratehub.ca from the Canadian Real Estate Association, the National Composite MLS Home Price Index fell 0.6 per cent in February from the previous month and was down 4.8 per cent compared with a year earlier.
Ratehub.ca said affordability remains closely tied to borrowing costs, with even modest increases in mortgage rates affecting how much buyers can qualify to borrow under Canada’s mortgage stress test rules.
In Montreal, prospective buyers and renters say rising prices are making it increasingly difficult to imagine entering the housing market, with many pointing to savings challenges, income gaps and reliance on family support.
One resident said the first thought that comes to mind when hearing “housing affordability” is rising prices.
“I’m just worried about the prices of the house going up, and I think that’s my number one concern,” he said. “I’ve been looking for rents, but not much for housing. I think it’s so far ahead of me that I didn’t really want to think about it.”
He said the issue is already creating stress about the future.
“The prices keep going up, and I’m just worried about not being able to afford a house even after working for several years,” he said. “I’m working as an accountant, but despite that, I think buying a house is still not achievable in the near future.”
Another Montreal resident described housing affordability as an issue of accessibility and inequality.
“Accessibility, I would say, for the average person,” he said. “Affordability would be something for most people, the average person… It’s just that the inequality between the two doesn’t let you get where you need to get.”
He said saving for a home has become increasingly difficult, even with shared household income.
“I’m worried about buying my first home,” he said. “We ended up moving back… because saving with an apartment is obviously much more difficult. You’re paying like $2,000 a month plus utilities.”
He said relying on family support has become common for many.
“You have to use your family’s resources, otherwise how do you get ahead?” he said. “If you don’t have that support, you’re really on your own.”
He added that rising prices make homeownership feel out of reach even with strong income.
“It’s like, how do you save $100,000 in the economic conditions we’re in?” he said. “Even if you make $100,000 a year, you have expenses. How do you get ahead?”
A third Montreal resident said buying outside the city may be the only realistic option.
“It’s harder than before. It’s way harder than before for somebody alone,” he said. “If you’re looking for a house, you have to look way outside of Montreal.”
He said government measures aimed at helping first-time buyers are a step forward but not enough.
“I don’t think that’s enough,” he said. “It’s a good gesture, but I think more needs to be done.”
He added that he is not optimistic about staying in the city long-term.
“I’ll probably have to move out of the city to find a home.”
