OTTAWA — The Bank of Canada says rising home prices have increased household debt levels, but steps taken by regulators to tighten mortgage lending rules have helped manage the associated risks.
In a speech in Kingston, Ont., deputy governor Lawrence Schembri said the strength in the housing market has increased household imbalances.
However, he says the risks stemming from these vulnerabilities have been well managed.
The government has moved several times in recent years to tighten mortgage lending rules, including a reducing the maximum amortization period for insured mortgages as well as changes to the qualifying rules.
Home prices have been rising relative to income in Canada and other comparable countries for about 20 years.
The increase has been driven by demographic forces as well as lower interest rates and changes in mortgage financing. Constraints on supply, especially in urban areas, have also played a role.
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