Housing market can withstand gradual 2% mortgage hike

Canada's housing market would be more than able to withstand a modest two per cent increase in mortgage rates as long as it's implemented slowly, over a year or two, BMO economist Robert Kavcic says.

In a report Friday, Kavcic runs some numbers trying to gauge the impact of what would happen if Canadian mortgage rates increased by about two per cent.

The housing market has been pumping out strong gains for more than a decade, which has caused policymakers and many private-sector observers to worry that prices are too high, and think a correction has to be coming — especially once mortgage rates return to more normal levels.

But there isn't necessarily anything to worry about in a modest, two per cent hike, Kavcic finds — depending on how it's implemented.

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Randy Ramadhin

Randy Ramadhin

CENTURY 21 People's Choice Realty Inc., Brokerage*
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