Canadian homebuyers should be winners because of declining home prices , but rising mortgage rates are robbing them of that win, says a new Rates.ca report.

Buyers in June needed more income to qualify for bigger mortgages, even in cities where prices fell, as affordability worsened in 11 of 13 of Canada’s largest housing markets .

“Normally, lower home prices help improve affordability by reducing the size of the mortgage buyers need to qualify for,” the report said. “However, in June, the increase in borrowing costs had a greater impact than falling home prices in most markets.”

Average five-year fixed-mortgage rates rose in June to 4.57 per cent from 4.49 per cent among the big banks, pushed up by higher Government of Canada bond yields. The increase also pushed up the mortgage stress test qualifying rate.

Prices fell in Vancouver, Victoria, Edmonton, Toronto, Ottawa and Fredericton, but rising mortgage rates still increased the amount of income needed to qualify.

For example, in Vancouver, the average home price dropped $1,600 in June from May, but monthly mortgage payments rose $37, while the annual income required to qualify rose $1,200 to $226,400.

Affordability took a double whammy in Calgary, where home prices rose by $4,000, helping to push both a monthly increase of $44 in mortgage payments and the amount of annual income needed to qualify for a mortgage up $4,670 to $125,770.

Prices, mortgage payments and income requirements also rose in St. John’s, NL, Regina, Montreal and Winnipeg.

Rates.ca arrived at its calculations using the Canadian Real Estate Association ‘s average home price, a 10 per cent down payment, a mortgage with a 25-year amortization period, property taxes of $4,000 a year and monthly heating costs of $150.

“Halifax was one of only two cities where affordability improved in June, and by the widest margin, driven by a substantial $11,400 decline in the average home price,” the report said.

Monthly mortgage payments in Halifax’s capital fell by $35 and income requirements dropped by $1,400 a month.

Hamilton was the only other city where affordability improved, though by a much narrower margin. Mortgage payments dropped just $3 a month.

“With housing prices stabilizing and fixed borrowing costs facing upward pressure from continuing geopolitical tensions and shifting trade dynamics with the U.S., housing affordability is unlikely to improve significantly for the remainder of the year,” the report said.

Rates.ca isn’t the only one warning about housing affordability.

Royal Bank of Canada Economics on June 26 that housing prices have likely bottomed and income growth will have to do “a lot of the heavy lifting” if affordability is going to continue to improve.

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U.S. refiners are ramping up diesel production to near-record levels, bucking seasonal trends as the Russia and Iran wars trigger a global supply crunch.

Refiners have produced an average of 5.3 million barrels of distillate fuel oil — which is predominantly diesel — every day this month, according to data from the United States Department of Energy. If that pace continues, it will be the most diesel the U.S. has ever made in the month of July, and one of the highest months on record outside of winter heating season.

Profit margins for making diesel from crude oil in the US and Northwest Europe have already surged to all-time highs.

Read the full story here .

  • Today’s Data: CFIB Business Barometer, Canadian retail sales for May, Bloomberg July United States economic survey, initial and continuing jobless claims, Chicago Fed National Activity Index, Kansas City Fed Manufacturing Index
  • Earnings: Teck Resources Ltd., A&W Food Services of Canada, Mullen Group Ltd., IMAX Corp., Winpak Ltd., FirstService Corp., Dow Inc., Blackstone Inc., Honeywell International Inc., Lockheed Martin Corp., Harley-Davidson Inc., Nasdaq Inc., Intel Corp., Ovintin Inc.

  • Baby boomers are trying to unload their stuff. Does anybody want it?
  • Carney is serious about privatizing airports, Australian pension executive says
  • Why Trump’s new Canada tariffs target autos, alcohol and cheese

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McLister on mortgages

Want to learn more about mortgages? Mortgage strategist Robert McLister’s Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus check his mortgage rate page for Canada’s lowest national mortgage rates, updated daily.

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Today’s Posthaste was written by Gigi Suhanic with additional reporting from Financial Post staff and Bloomberg.

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