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The amount of income required to qualify for a mortgage has increased at a faster rate than home prices in Canada over the last 15 years, a new study shows.
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Online mortgage lender Nesto recently compiled data on the amount of income required to qualify for an uninsured mortgage with a 20 per cent down payment. And it found that in some provinces the amount of income required increased by more than 200 per cent.
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Alberta, however, saw the second lowest increase among provinces in income required, while seeing the lowest increase in average price.
Here, the average price increased from about $356,000 in 2008 to nearly $475,000 this year, about a 33 per cent rise. Yet the income required to qualify for a mortgage grew from about $65,000 to nearly $114,000, almost a 78 per cent increase.
Saskatchewan experienced the lowest increase in income required to purchase a home, increasing by about 74 per cent, whereas the average price grew about 34 per cent.
Ontario, in contrast, had the largest increase in home price over the last 15 years, up from about $320,000 to almost $923,000, a jump of almost 189 per cent. The income required to buy the average home rose even more percentage wise, about 274 per cent. The average income required was about $58,000 in 2009 and today, it’s more than $217,000.
The biggest percentage increase in income required, however, was Prince Edward Island up about 299 per cent. In 2008, buyers needed just over $30,000 to qualify, and today they require about $93,000. As well, the average price was about $139,000 in 2008 in PEI and, today, it is about $358,000. That is an increase of 155 per cent.
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