![\"\"](\"https:\/\/www.livabl.com\/articles\/wp-content\/uploads\/2018\/11\/calgary-homes.jpg\")
<\/a><\/p>\nPhoto: James Bombales<\/em><\/p>\n Canada\u2019s GDP grew by 2.0 percent in the third quarter of the year, falling just below many economists forecasts. While there were several factors involved in the somewhat lacklustre growth figure, a cooling housing market certainly had a role to play.<\/p>\n Booming home sales in some of the country\u2019s biggest housing markets kept the economy riding high in 2017. But, ever since a new mortgage stress test was introduced in January, both housing activity and GDP growth have been lagging.<\/p>\n\n \u201cBoth consumer and government spending were so-so (at 1.2 percent and 1.9 percent, respectively), while housing fell again (-5.9 percent),\u201d writes Douglas Porter, chief economist at BMO, in his most recent note.<\/p>\n Earlier this week, CIBC economist Royce Mendes noted that the cooling housing market could also be blamed in part on rising interest rates. After years of historically low rates, the Bank of Canada hiked the overnight rate to 1.75 percent in October, and is expected to do so again in the new year.<\/p>\n \u201cGrowth popped higher in the second quarter, but momentum has slowed since then,\u201d wrote Mendes. \u201cHousehold spending appears to be feeling the pinch of higher interest rates. So is the housing market, which is also being dragged lower by tighter mortgage lending standards.\u201d<\/p>\n