02/28/2017 04:36 EST | Updated 02/28/2017 10:45 EST

Toronto, Vancouver Housing Markets Headed For Correction: Scotia CEO

"Trees don't grow to the sky and markets will correct at some stage here."

TORONTO — The CEO of Scotiabank says he's concerned about the possibility of a housing market correction in Toronto and Vancouver.

Brian Porter, who was asked about his outlook for the Canadian mortgage market during a conference call to discuss the bank's first-quarter results, said he's supportive of recent government changes introduced to reel in house price growth.

Scotiabank CEO Brian Porter says the Toronto and Vancouver housing markets will have to correct at some point. (Photo: The Canadian press)

"Trees don't grow to the sky and markets will correct at some stage here,'' Porter told analysts Tuesday after the bank reported net income of $1.49 billion during the first quarter of the year.

Ottawa introduced a series of changes to mortgage rules last October, including one that requires all insured mortgages undergo a stress test to make sure that borrowers would still be able to repay their loans if interest rates rise or their circumstances change.

Previously, stress tests were not necessary for fixed-rate mortgages longer than five years.

"I think we're going to need some time to see those take hold, and we will see that through the spring mortgage season,'' Porter said.

Porter highlighted the bank's "very conservative mortgage book,'' saying more than half of its portfolio of mortgage loans is insured.

"So really the message is we're governing ourselves accordingly,'' he added.

Scotiabank chief financial officer Sean McGuckin said that if prices continue to grow, more government intervention may be useful.

"I wish I had a crystal ball. I just don't have one in terms of where prices will go,'' McGuckin said in an interview.

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