Bank of Canada Warns Some Canadians Are Taking On Too Much Debt Chasing Housing Prices

The Bank of Canada is sounding the alarm over the country’s housing market, which continues to heat up amid constrained supply and surging prices.

In an interview with the Financial Post, BoC governor Tiff Macklem said that there are worrying signs that some homebuyers are taking on too much debt relative to home values. “Canadians are stretching and that is worrying,” Macklem said. He also warned that some individuals are making property purchases under the assumption that prices will continue increasing. “If Canadians are basing their decisions on the kinds of price increases that we’ve seen recently are going to continue indefinitely, that would be a mistake. They’re not sustainable,” he explained.

At the same time, however, the governor noted that there is very little the central bank can do to deter some of the rising market activity, especially since interest rates are expected to remain low in support of the economic recovery.

Macklem’s latest comments echo an increasing number of calls among economists and analysts for policy makers to intervene in Canada’s hot housing market. In just the past week alone, economists at both the Royal Bank of Canada and the Bank of Montreal have urged officials to take necessary steps to break the notion that real estate gains will continue rising.

Another main reason contributing to the surge in home prices is the continued lack of supply. In an effort to free up more housing for Canadians, Prime Minister Justin Trudeau has revealed the federal government will introduce a tax on foreign non-resident home owners.


Information for this briefing was found via the Financial Post, Bloomberg, and Nanos Research. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Video Articles

2026 Could Be Gold’s Biggest Year Yet!? | Ryan King – Equinox Gold

Gold Is Screaming Higher While Currencies Burn | Simon Ridgway – Rackla Metals

We Have the Highest-Grade Antimony Deposit in North America!? | Jim Atkinson -Antimony Resources

Recommended

Canadian Copper Secures $8 Million Lead Order From Ocean Partners As Part Of Larger Funding Round

Northern Superior Expands Philibert With 350 Metre Step Out Testing 1.10 g/t Gold Over 25.5 Metres

Related News

Pending Home Sales in the US Fall to Record Low in April

Due to lockdowns and social distancing measures imposed in the US as a means of...

Saturday, May 30, 2020, 05:23:00 PM

Canada’s Bank Regulator Proposes Tighter Mortgage Rules Amid Booming Housing Market

Canada’s main banking regulator, the Office of the Superintendent of Financial Institutions (OSFI), has proposed...

Thursday, April 8, 2021, 04:16:00 PM

Canadian Home Sales Set New Record With Increase of 45.6% in September

Canada’s housing market has thus far defied the coronavirus pandemic, and despite many analyst’s projections...

Thursday, October 15, 2020, 12:47:41 PM

14 Million Americans Slated to Lose Unemployment Benefits, 30 Million Face Eviction Risk By January 1

The Christmas holidays are likely going to be grim for millions of Americans, and not...

Wednesday, November 25, 2020, 12:03:00 PM

Mall Landlords Across the US Filing for Bankruptcies Amid Brick-and-Mortar Apocalypse

Over the weekend, two major US mall landlords filed for Chapter 11 protection, joining the...

Monday, November 2, 2020, 06:17:00 PM