Strong economy to offset rising mortgage rates

The bank anticipates a 0.5 per cent gain in the market in 2011 and 1.3 per cent in 2012, making for an uninteresting real estate sector over the next few years, RBC economist Robert Hogue told The Globe and Mail.

“Going forward, we see nearly perfectly offsetting forces driving Canada’s housing market,” he told the national paper. “On the upside, the economic recovery will gather strength in 2011, continuing to boost employment and family incomes. On the downside, interest rates are expected to rise.”

The Bank of Canada will likely increase interest rates by one per cent this year and another 1.5 per cent in 2012, predicts Hogue, causing more expensive mortgage payments for most homeowners.

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