What 2% wage growth does to your mortgage approval

Average hourly wages rose 2.0% in August, the slowest growth since 2017. Lenders size your mortgage off income, so that number sets your borrowing room.

Statistics Canada published the August Labour Force Survey this morning. Employment fell by 42,000 across the country, and average hourly wages were up 2.0% from a year earlier, a rise of $0.71 to $37.02.

The wage number is the one that reaches your mortgage. A lender does not size your loan off a national job count. It sizes it off what you earn.

How does slower wage growth change what you can borrow?

It slows the growth in what a lender will approve. The calculation starts at your income, moves to a payment you can carry, and ends at a loan amount. On top of that, a federally regulated lender has to qualify you at the greater of your contract rate plus 2 percentage points or 5.25%. Income is the one input in that test you bring yourself.

Wage growth was 3.3% in June, 2.8% in July and 2.0% in August. Statistics Canada records that as the slowest since November 2017, leaving aside 2021 and the pandemic years. None of the lending rules changed over those three months. The number going into them did.

Our affordability calculator runs the same arithmetic on your own figures, and our guide to how the stress test works covers what a lender is actually testing for.

Did every household see the same raise?

No, and the gap is wide. Statistics Canada reports that for employees in the bottom 25% of the wage distribution, average hourly wages were up 1.1% over the year, to $18.66. For the quarter above them, 1.3%, to $26.61. The third and top quartiles both grew 2.1%, to $37.99 and $65.15.

That is the part with the sharpest housing edge. The households finding a down payment hardest to reach are the ones whose borrowing room moved least this year. If you are buying a first home, the rebates and programs available in Ontario are worth reading before you set a budget.

Is the Toronto job market getting worse?

Not in these figures. In the Toronto census metropolitan area the unemployment rate was unchanged at 6.7% in August, down from a recent high of 9.0% in July 2025. Ontario lost 18,000 jobs in the month, but employment in the province is still up 116,000, or 1.4%, on the year, and the provincial unemployment rate of 6.9% is 0.8 percentage points below where it sat in August 2025.

The softer half of this release is national. The employment rate fell to 60.8% and the participation rate to 65.0%, while the unemployment rate held at 6.4%. Of the 1.5 million people unemployed in August, 24.0% had been searching for work for 27 weeks or more, against an average of 17.1% from 2017 to 2019.

What does this change for you this month?

It depends where you are in the process.

Buying. Ask your lender which income figure it used and what period it covered. Ask again if any part of your pay is commission, bonus or overtime, because those are usually averaged rather than taken at face value.

Renewing. Your new payment is set by the rate. Whether you can carry it is set by your pay, and that grew 2.0% over the year. If the gap looks uncomfortable, there is more room to act before the renewal date than after it.

Selling. Your buyers are qualified on the same arithmetic you were. Slower income growth limits what they can be approved for, separately from what they would like to offer.