With the major Canadian banks announcing a rise in the lending rates, the euphoria of exceptionally low mortgage rates has started fading away from this week.

However, the higher rates may not cause an immediate sloth in the Toronto housing market.

Marc Pinsonneault, Senior Economist, Economy and Strategy Group, National Bank Financial Group said that the higher rates would help in balancing the sales tax.

He also said that the Canadian Real Estate Association sales figures for February and March reflect toughness in the housing market as an increased number of buyers are rushing for smaller supplies of homes for sale.

However, he predicted a settlement in the housing sector with more and more homes entering the market for sale in the rest half of the year.

"My expectation is that, in the second half of the year, the market will be balanced in Toronto", he said.

He forecast a sloth in the monthly surge in the house prices given the balanced market scenario. But at the same time he also said that the prices are not at all likely to reduce.