The influx of home buyers from the GTA moving to Hamilton is intensifying as a new wave of Torontonians try to offset the added costs of new mortgage rules and rising interest rates.

Housing analysts and local realtors are starting to see a spillover effect from the new stress test being applied to mortgage applicants since Jan. 1.

The stress test requires home buyers to demonstrate they can afford higher payments if interest rates rise substantially. That means some buyers have had to settle for smaller mortgages that fall short of their needs to buy in the GTA.

On Wednesday, the Bank of Canada raised its key lending rate by a quarter percentage point to 1.25 per cent — the highest it has been since 2009.

Economic forecasters believe rates will rise further over the months ahead, putting a further squeeze on buyers.

"Anything that's done to make a property less affordable will push some people into other markets," says George O'Neill, CEO of the Realtors Association of Hamilton-Burlington.

Hamilton's real estate market has been marked in recent years by a huge influx of Torontonians taking advantage of dramatically lower prices.

They can't afford the Toronto market, so they are moving here and commuting back to Toronto to work. That's led to rising prices here — but still leaves local housing prices about half that of Toronto.

Hamilton home sales statistics for January won't be available until after the month ends. But Conrad Zurini, broker of record for RE/MAX Escarpment Realty, noted an interesting stat from December sales numbers.

A total of 33 per cent of sales in December involved realtors from outside the local board, with almost all of them representing Toronto buyers. That compares with 27 per cent for the year.

In other words, there was a spike of interest in Hamilton by Toronto buyers in anticipation of the stress test coming into force and expectations of rising interest rates, he said.

"The spillover started happening in December," said Zurini. "That's very interesting."

Ettore Cardarelli, president of the Ontario Real Estate Association, said, "With increases to interest rates and the new mortgage lending rules, it's becoming more and more difficult for potential home buyers to achieve that dream of home ownership, especially for millennials and young families.

"We're already seeing many travel down the QEW because of lower home prices in Hamilton, and we'll probably be seeing more this year."

It's a trend that's caught the eye of the banking world.

A recent Scotiabank economic forecast predicted an uptick in Torontonians leaving the Toronto market because of increasing mortgage costs.

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Brett House, Scotiabank VP and deputy chief economist, told The Spectator, "People who are being priced out of Toronto as a result of the mortgage rules and higher interest rates might see Hamilton as a cheaper market.

"That would mean new demand from Toronto refugees."

Canada Mortgage and Housing Corp. senior market analyst Anthony Passarelli said, "I would agree with the comment that you will see more GTA buyers moving to Hamilton with the loss of purchasing power.

"For some of them it is a question of whether they want to have a townhouse in the GTA or a detached house in Hamilton. And the price of townhouses in Toronto is still more expensive than detached houses in Hamilton."

Others from the GTA are seeing greater investment certainty in our market than Toronto. They're buying condominium units to rent out.

In March 2016, James Schwartz, a bicycle advocate in Toronto, bought a condominium for $268,000 in the FilmWork Lofts building at Catharine and King William streets as an investment.

"In terms of value it has gone up quite significantly since I bought it two years ago and it's been rented out the whole time without any gaps," he says.

He's been so happy with that investment, he recently bought a second Hamilton condo on Murray Street, close to the West Harbour GO Station. That one cost $515,000, but he is still confident it will also turn out to be a good investment.

So will the uptick in Toronto buyers make it more difficult for Hamiltonians to find real estate?

Not necessarily, say realtors.

There is evidence that new buyers from Toronto are being at least partially offset by Hamiltonians fleeing the Hamilton market for less expensive homes in places such as St. Catharines.

"As you go further east you can get more property for the same dollar, generally," said O'Neill.