The ability to afford a house depends on lots of factors, not the least of which are mortgage rates.

In fact, the Bank of Canada’s rate hike campaign (when it comes) could “dominate all other factors determining affordability,” according to RBC economist, Craig Wright.

Earlier this year, economists predicted that we’d see higher rates starting this fall. Their forecasts have now shifted to mid-2012.

As a result, Wright says: “…The postponement of interest rate increases…might extend the upward momentum in (home) prices in the coming quarters.”

This temporary reprieve from rate hikes could reduce pressures on home ownership costs in the short term, he suggests, but potentially exert “some negative force on affordability” down the road (due to possible home price increases resulting from rate-driven demand).

“By and large, the share of household budgets, taken up by the costs of owning a home at current market values, remains close to historical norms,” adds Wright, while noting Vancouver is a big exception. “Vancouver’s housing market is without a doubt the most stressed in Canada and is facing the highest risk of a downturn.”

RBC issues its affordability readings quarterly. They measure the percentage of gross income needed to pay mortgage payments, utilities and property taxes on “typical” homes across Canada.

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Here’s a prior related story:  RBC’s Affordability Measure – Affording a House Today

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Rob McLister, CMT