As the Canadian economy emerges from the recession slowly but surely, there is speculation that the Bank of Canada will respond by raising interest rates.

The real estate market is steadily growing in price and sales; it's estimated that national home sales are up more than 18 percent year-over-year. In addition, employment is increasing and the loonie recently hit a new one-year high. Given these new circumstances, there is reason to believe the economy is finally beginning to recover.

This could cause the bank to raise interest rates before the Federal Reserve, breaking their promise to freeze rates until June of 2010. An interest rate hike would help prevent a situation similar to what happened in the United States' housing market.

Canadians should be prepared for aggressive increases of up to one percentage point at a time. What does this mean for home buyers? Now may the time to buy as its unlikely interest rates will be this low again for a while.