Any homebuyers hoping for an improvement in housing affordability as the Bank of Canada gets set to raise interest rates might be left disappointed, according to a Bay Street strategist. 

“I don’t think the psychology around the real estate market is likely to change all that much. It’s still a broadly accommodative situation,” said Andrew Kelvin, chief Canada strategist at TD Securities, in an interview Wednesday.

An increasing number of economists are now forecasting the Bank of Canada will kick off its rate-hike campaign at its Jan. 26 meeting, and market data show as many as six increases are expected by the end of this year, which would bring the benchmark interest rate to 1.75 per cent – still low by historical standards.

“Interest rates will no longer be zero – that has to have some effect,” Kelvin said, but added that any impact will only be “on the margin,” especially if the jobs market remains strong.

Mortgage rates have already moved higher, along with bond yields, in anticipation of higher rates.

“[The rise in bond yields] will do some of the work for the bank but they still have to follow through,” he said.

Kelvin said he thinks the Bank of Canada should hike rates this month, and his forecast is for the benchmark rate to ultimately land at two per cent by the second half of 2023.

“Simply put, the time for waiting - for patience - has probably run out,” he said.

“Given that inflation expectations are starting to show signs of being unanchored – just early signs – I don’t think the balance of risks support holding until March,” he said. “I think it’s more prudent for them to hike in January and have a little bit of faith that the economy will recover quickly from this COVID shutdown as it has from past COVID shutdowns.”

However, he said he would understand if the bank waits until March because it would buy time to gauge how the labour market fared in January when fresh lockdowns took effect across the country.