The Bank of Canada is still worried about housing debt levels in Canada and joins the OECD in expressing that concern:
The two biggest concerns on the bank’s radar are also intertwined. It said the growth in mortgage lending in Toronto and Vancouver has largely fuelled an increase in Canada’s overall household indebtedness since the bank’s last review six months ago.
“Highly indebted households have less flexibility to deal with sudden changes in their income,” said the bank.
“As the number of these households grows, it is more likely that adverse economic shocks to households would significantly affect the economy and the financial system.”
The document was released as concerns about the Canadian real estate market — domestically and from abroad — continue to pile up.
The recent BC first time buyer loans program announced by the liberal government has successfully driven condo prices higher by handing out interest free loans from tax payers to first time buyers, but it sounds like David Eby and the NDP want to ruin that party:
“We were told by economists at SFU, UBC, CMHC that the impact of the program would be to increase the cost of the housing stock,” says Eby.
“Essentially a transfer of money directly to developers and people selling their existing homes, and put people further into debt. So if that is truly the impact of the program in Metro Vancouver, then that’s something we want to review and make sure there’s not a better way we could allocate the $700-million that’s been allocated to that program.”