The Royal Bank of Canada's recently released housing affordability measure indicates that home servicing costs in relation to incomes experienced a slight drop in the last three months of 2013. This comes after two quarters of increases.

However, in a new report, RBC says that the relief will only be temporary, especially since mortgage rates are expcted to rise across the country this year.

In the report, chief economist Crain Wright stated that "RBC anticipates that as longer-term interest rates begin to moderately rise, the costs of owning a home at market value will gradually outpace (growth) household incomes by late 2014, leading to strained affordability in several markets across Canada, much like the trend in Toronto."

Recently, mortgage rates have remained stable or even showed signs of decrease, with some brokers offering five-year fixed rate mortages with sub-3 per cent rates. But the report also forecasts that with bond yields expected to climb as Canada's economy comtinues to improve, mortgage rates will increase simultaneously.


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