BoC's Affordability Index reaches its worst level since 1991

  8/14/2022 |   SHARE
Posted in Home Buyers by Eileen Farrow | Back to Main Blog Page

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Housing affordability deteriorated to its worst level in over 30 years, according to data from the Bank of Canada.

The BoC released the first-quarter results of its Housing Affordability Index (HAI) this past week, which rose sharply compared to the previous quarter.

The data shows a household must now devote 42.8% of its disposable income to housing-related expenses. That’s up from 39.7% in Q4 2021 and 34.7% a year earlier.

The Index measures the share of income needed for housing costs such as mortgage payments and utilities, but excludes property taxes.

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The release follows similar findings from National Bank of Canada’s first-quarter Housing Affordability Monitor. That measure, which strictly tracks mortgage carrying costs, saw its fifth consecutive deterioration.

“For the first time since 1994, it would take more than 50% of income for a representative household to service the mortgage on a representative home in Canada’s main urban centres,” NBC noted.

The change was driven by a then-46-bps quarterly increase in the 5-year benchmark rate used in the report’s affordability metrics—the largest quarterly increase since 2013.

Both fixed and variable rates have since risen substantially since then.

Source: Canadian Mortgage Trends



Bank of Canada, First Time Home Buyers, Home Buyers, Housing Affordability



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