It's already risen 50bp since July. This has added about $24/month for every $100k borrowed for a mortgage. A further 100bp is unlikely to happen any time soon due to a number of factors including the
impact the previous increases have had on the loonie. A mortgage stress test implemented last year on insured mortgages meant that borrowers had to qualify based on a 4.64% interest rate, which would be in line with a full 150bp increase.
If it did happen, interest rates would still be low by historical standards - probably a return to 2005 levels - but it would dampen the Toronto market further in the near term. But Toronto and Vancouver are outliers. Most of Canada's housing markets have not experienced the same price inflation.
Some points to consider:
-in 10 years there will be another 1 million people living in the GTA, and they all need somewhere to live
-while Canadian household debt is at record levels ($2 trillion), Canadian household assets are also at a record high of $12 trillion.
Barring a shock to the economy like a rapid loss of jobs (but we're the
new Silicon Valley!) I wouldn't expect a major deterioration of bank asset quality. Fortunately, prices in Toronto are stabilizing and in some cases reversing. But the fact is there is too much debt out there (the high and growing consumer debt, I think, is perhaps a bigger concern), so I hope folks start to rein it in some.