RBC Says National Housing Affordability Hits Four-Year Best at 53% of Income in Q1 2026

The most important sentence in RBC's release for current owners is the forward-looking caveat. RBC warned that further affordability gains will be slimmer because prices appear to be stabilizing in most major markets, and it does not expect additional Bank of Canada rate cuts this year. Stable prices and stable interest rates together imply little change to mortgage costs over the back half of 2026.

The rate environment supports that read. The Bank of Canada's policy rate has held at 2.25% across all four 2026 decisions — January, March, April and June, per the central bank's own rate page. The Bank's April deliberations explicitly noted that something close to the current 2.25% rate would likely be appropriate in the base case, and that any changes from here would be expected to be small. That is as close as a central bank gets to saying the easing cycle is over.

The renewal wave is the second half of the story. The Bank's 2026 Financial Stability Report estimates that the last cohort of five-year fixed-payment mortgages taken during the pandemic — about 12% of all outstanding mortgages — will renew over the next 12 months and is expected to see payments rise by roughly 15% on average. Another 14% of outstanding mortgages renewing over the same period are variable-payment or shorter-term fixed-payment loans taken after rates rose in 2022–2023, and those borrowers on average are not expected to see payment changes. The risk is concentrated in the pandemic-fixed vintage, not spread evenly across the entire mortgage book.

Refinancing capacity at current prices looks broadly intact. The Bank estimates only about 4% of borrowers renewing in 2027 would be unable to refinance at renewal nationally, rising to roughly 9% in the Toronto area — and those shares would climb to about 7% and 12% respectively if home prices fell another 10%. Those numbers are scenario-based and not observed outcomes, but they describe where the system is more sensitive to further price weakness: in Toronto specifically, in detached homes specifically, in the cohort that bought near the top.

For owners who are not transacting, the cleanest read is that the worst-case scenario for the broad housing market — accelerating affordability deterioration paired with persistently rising rates — is not the one playing out right now. Affordability is improving, rates are flat, and prices are stabilizing in most markets. That is a steadier backdrop than the 2022–2024 environment, and a meaningful change from the trajectory CMHC's affordability composite index flagged earlier this year, when the crunch was officially spreading well beyond Toronto and Vancouver.

For owners considering selling, the resale picture is mixed. Buyer affordability is the best it has been in four years, which supports demand, but resale volumes that ticked up modestly in May after months of slack still sit below historical averages. The condo segment in particular — where affordability has corrected most — also faces the heaviest completion supply and the weakest pre-construction sentiment, especially in the GTA. The CMHC 2026 Housing Market Outlook expects national prices to stabilize and then rise modestly, but expects Ontario specifically to keep seeing price declines through 2026 before recovery in 2027. Condo starts are projected to remain particularly weak, especially in Toronto, where pre-construction sales fell to multi-decade lows in 2025.

For owners renewing in 2026 or 2027, the planning posture has not changed. The Bank of Canada's published mortgage stress analysis still applies: roughly 60% of renewers in 2025 and 2026 were expected to see payment increases, with average monthly payments about 6% higher for 2026 renewers and 15% to 20% higher for five-year fixed-rate renewers. About half of borrowers facing higher payments could eliminate those increases by extending amortization by five years, and most were expected to renew at rates below their original stress-test levels. Those are useful structural cushions. They are not a reason to skip the math.