NEWS

During a speech on Thursday, June 9^th, 2022, Bank of Canada Governor Tiff Macklem said rising rates aren’t expected to derail the nation’s economy and may even produce a “Healthy” slowdown in the housing market.

Macklem was speaking after the Bank of Canada’s Annual Report on Financial Stability was released. He explained that the national economy can handle “Higher Interest Rates” and that “Moderation in housing would be healthy.”

“If the economy slowed sharply and unemployment rose considerably, the combination of more highly indebted Canadians and high house prices could amplify the downturn,” Macklem told reporters, adding it could have “broad” implications for the economy and financial system.

A concern of the central bank is that they estimated the share of new mortgages this past year are going to highly indebted households. Those carrying loan to income ratios above 450 percent has surpassed pre-pandemic levels to hit new records.

According to the report, many Canadians would be left more exposed in the event of a correction as many of these households stretched themselves financially to get into the housing market.

Source: BNN Bloomberg