Canada’s national housing agency says the country’s real estate industry will be strong in the back half of the year, building on favourable economic conditions in the first six months of 2011.

Canada Mortgage and Housing Corp., in a report accompanying its quarterly earnings, said Monday that mortgage rates near historic lows and improvements in employment have led to fewer claims under its mortgage insurance business despite higher home prices.

CMHC insurance protects lenders against default.

The agency said it expected fixed mortgage rates to stay relatively flat for most of the year, with the five-year posted rate at between 4.1 per cent and 5.6 per cent, then increase slightly in 2012, while variable rate mortgages would remain near historically low levels.

But prices of homes shown on the Multiple Listing Service are expected to grow slightly going forward because the resale market is likely to stay in balanced territory.

Meanwhile, CMHC said changes to mortgage rules introduced by the federal government earlier this year played a part in reducing mortgage interest payments and allowed Canadians to build equity in their homes faster.

Canadians are finding it easier to pay off their mortgages, with arrears levels improving and the volume of mortgage insurance claims lower than expected.

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