Housing prices more Affordable 

The recent fall in housing prices in Canada has made home ownership more affordable, and broad-based cuts to mortgage rates announced Wednesday will make that dream even more affordable. 
The upside to the downside in housing prices is it has made housing more affordable, especially in some western Canadian cities, according to Desjardins Group, which reported that its index of Canadian housing affordability is "slowly but surely inching its way" back up to its historic average.

The Quebec-based bank's affordability index, which has averaged 128.8 over the past 20 years, rose to 115.9 in the third quarter of the year from 112.4 in the previous quarter.

"The softer growth in average prices for properties in several Canadian markets, including the particularly sharp decline in markets like Calgary and Vancouver, explains these results," Desjardins said.

The country's largest bank, RBC, later Wednesday, made housing even more affordable, announcing mortgage rate cuts of up to three-quarters of a percentage point, though with most being a quarter point, effective Thursday.

Desjardins, and then other banks began following with similar widespread cuts.

However, its housing affordability report suggests would-be homebuyers may want to wait before rushing in to fulfil their dream of home ownership.

"In spite of improvements to affordability since the start of 2008, the housing market will continue to lose steam in the months ahead," it said.

"The grim economic forecasts attributable to the global financial crisis caused household confidence to plummet this fall," Desjardins said. "This climate of uncertainty also contributed to the ongoing decline in the number of existing homes sold, which is down 12.6 per cent in Canada since the start of the year, and down 26.5 per cent in Calgary and 29.2 per cent in Vancouver.

"On the other hand, the quasi-stability of mortgage rates these past few months did nothing to influence recent shifts in affordability in Canada," it added, noting that the benchmark one-year rate remained at 6.25 per cent while the five-year rate rose slightly from 7.1 per cent at the end of June to 7.2 per cent at the end of September.

The rate cuts announced Wednesday reduce the one-year posted rate at both RBC and Desjardins to 5.6 per cent and their five-year rates to 6.95 per cent.

Americans, meanwhile, were getting an even greater dose of mortgage rate relief.