Income needed to buy a home in Ottawa drops in July

With inflation cooling, the Bank of Canada is starting to cut interest rates, which means that buying a home in Canada is becoming a bit easier.

After years of saving, Josh Cardillo will soon be able to call himself a homeowner.

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"I'm turning 30 in a couple of months and decided it was time to buy my first home," said Cardillo.

It won't be cheap — the Ottawa resident recently closing the deal on a $670,000 home.

"It's a little scary, just going from a rent that was a lot more affordable to a mortgage that's going to be $1,500 more than what I've been paying for rent," he said.

For homebuyers entering the market, some relief may be on the way as new numbers from Ratehub show the income needed to buy a home dipped in July for 13 major Canadian cities. The salary threshold dropped by more than $5,000 in Canada's two priciest markets, Toronto and Vancouver.

In Ottawa, the average income needed to buy a home was $129,650 in July, down from $131,210 in June. It's a trend many are keen to see.

"The income has dropped because the interest rates have dropped," said Frank Napolitano, managing partner at Mortgage Brokers Ottawa. "With interest rates coming down a half per cent now, we've seen fixed rates come down in that neighborhood close to a half per cent as well. That's made a big difference."

While the average cost of home prices also dropped for most of the country, Ottawa prices increased slightly, up $1,200 between June and July, more than offset by the interest rate cuts.

"If interest rates come down, as much as we hope they will over the next six and 12 months, then you'll see that that number will continue to come down as well," said Napolitano.

And if those rates do indeed come down, it's big news for Cardillo, who is set to take the keys in October.

"Hopefully they continue to go down and not up," he said. "Definitely huge that interest rates are going down and we're going to do a variable mortgage. So, to see interest rates going down, that's obviously going to help my monthly payments."

The next interest rate announcement is scheduled for early September.