Wednesday, April 30, 2014

Bank of Canada chief sees no housing crash

The numbers certainly support the Bank of Canada’s expectations for heading off a housing meltdown. The question is, how long will that last? reports The Globe and Mail.

And the answer – who knows? - is one of the reasons central bank chief Stephen Poloz is still concerned.

The Bank of Canada governor said he still expects a soft landing in residential real estate, and that the debt burden among consumers will continue to stabilize. According to Mr. Poloz, we’re more responsible now.

But, the “imbalances” in the housing market are still elevated, he said, which means Canadians are vulnerable should we see another economic shock.

“Consumers are showing responsibility; for example, homebuyers who opt to buy less than they qualify for so they don’t find themselves overextended if interest rates rise,” he added.

“Banks, as well, are underwriting loans more carefully, ensuring that people can service their debts if rates go up. So, while the risk could be significant, we are comfortable that it is not outsized.”