Last week, the Bank of Canada Governor, Stephen Poloz addressed concerns regarding the state of the Canadian housing market. Admittedly, the Governor conceded that high levels of household debt in combination with high housing prices may pose risks for the economy at large; however, he reiterated his position that the housing market would merely encounter a ‘soft landing’.
“The most important domestic risk is a sharp reduction in house prices,” according to the BoC Governor.
Poloz claimed the possibility of a large correction to be minor, and that if a large catalyst were to occur, it would likely be due to external issues such as a failure in the global economic recovery.
Low mortgage rates were also addressed by the Bank of Canada’s Governor as a bi-product of the Bank of Canada’s continually low Overnight Lending rate, the rate used by various banks and lending institutions to determine their Prime Rates for clients.
“Stronger housing and stronger consumption was exactly what we were hoping to achieve,” said Poloz in reference to today’s low mortgage rates.
Poloz used the word “comfortable” when describing the Bank of Canada’s stance on the current trends in the Canadian housing market and expressed his belief in a soft landing scenario for the housing sector.BACK TO BLOG FEED