Canadian Housing Affordability Set to Deteriorate as Mortgage Rates Rise, National Bank Says

07:18 AM EDT, 09/11/2026 (MT Newswires) -- Canadian housing affordability is expected to worsen for the first time in three years as rising bond yields push mortgage rates higher, according to National Bank of Canada in a late Thursday note. Canada's five-year rate jumped 16 basis points to 3.65% on Thursday, reaching its highest level since May 2024 and continuing its rise from February's lows, wrote the bank in the note. The five-year fixed insured mortgage rate has risen just 40 basis points over the same period, narrowing the gap with bond financing costs to 75 basis points, which is well below the roughly 135-basis-point average since late 2023. "Such a narrow spread puts pressure on lenders' margins and is likely unsustainable in the long run," added the bank. The bank estimates that the National Bank Affordability Index will hold steady in the third quarter before deteriorating by 1.1 percentage points in the fourth quarter, marking the first decline in housing affordability in three years.