â€œDespite high prices, housing remains reasonably affordable due to record low interest rates,â€ said Sal Guatieri of BMO Economics. â€œThat said, Canadians should prepare for interest rates to eventually return to historic norms.â€
BMO has forecast that the Bank of Canada will raise interest rates by one percentage point before the end of the year.
But such an increase would not put undue stress on the housing market, the report said.
A typical Canadian homebuyer uses a third of total household income to service their mortgage, said the BMO report. But thatâ€™s not off from historic norms.
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While some were unsure, another 18% of Canadians said they would not be able to afford higher payments.