Rise Of The Home Sales

Despite signs long-term mortgage rates are creeping up, the housing market is continuing is bounce back to life according to the Canadian Real Estate Association.

In June 8.7% more homes were sold than in May.

It's the fifth straight month of increases -- a 17.9% increase over June 2008.

"This rebound reflects the releasing of a pent-up demand by buyers who moved to the sidelines towards the end of last year," said CREA chief economist Gregory Klump.

"Now there are signs the worst of the recession may be behind us, those people are emerging."

The bounce back was strongest in British Columbia where 39.8% more homes were sold in June this over the same month last year.

According to the CREA report,

Ontario was up 15.7%,

Quebec 9.8%,

Alberta 22.2%,

Saskat chewan 25.2%

Manitoba 0.2%.

This surge in home buying came despite a decision by Canada's five big banks last month to raise five-year fixed mortgage rates 40 basis points from 5.45% to 5.85%.

The decision was made despite the Bank of Canada's efforts to keep borrowing low by pledging to hold interest rates at the historic low of 0.25% until the middle of 2010.

Mary Webb, a senior economist with Scotiabank, says the low long-term interest rates in the spring were a reflection of a global economy with almost no signs of growth and that was bound to change.

"Now we're looking for a recovery, and not just in Canada but globally, and we're seeing it already in China and we expect growth to strengthen later this year and early next," Webb said.

With more people borrowing, banks are being forced to pay more to borrow the money they lend to home buyers and that drives up long-term interest rates, she said.