TORONTO (Reuters) - Canadian housing affordability improved by the most in a decade in the second quarter, as mortgage rates fell and household income rose, data from National Bank of Canada showed on Monday.
Mortgage payments as a share of household income fell 3.6% in the second quarter from the previous quarter to 45.1%, according to National Bank of Canada’s urban composite index. It was the largest quarterly decrease for the measure since the first quarter of 2009.
Housing affordability could be an important issue in Canada’s October federal election. A poll commissioned by CBC News showed last month that the cost of living, which includes housing costs, was the most worrisome issue for Canadians.
In the March federal budget, Canadian Prime Minister Justin Trudeau’s Liberal government introduced a program that lets some first-time buyers finance a portion of their home purchases through a shared equity mortgage with the Canadian Mortgage and Housing Corporation (CMHC), a government housing agency.
The benchmark 5-year mortgage rate fell 45 basis points and median household income rose 1.7% in the second quarter, National Bank of Canada said. Affordability in the second quarter was also helped by a 1.0% decline in home prices.
Affordability improved the most in Vancouver, Victoria and Toronto. Countrywide, improvement was seen in all types of dwellings.
Despite the jump in affordability, Vancouver and Toronto continue to be the least affordable cities in Canada.
Reporting by Levent Uslu; Editing by Chizu Nomiyama