11 January 2018

In addition to it, population growth will also keep supporting the national economy, especially as immigration policy pushes demand for real estate in the fastest-growing markets.

“After monitoring employment, population growth, homeownership, immigration, education and the stability of the welfare system, we can say the ratio of household debt to disposable income in the country is relatively conservative,” – they said. “It may reflect the general effect from all the measures taken for reducing the vulnerability of the financial system to real estate indebtedness.”

Canadian borrowers got used to benefitting from cheap credit in order to increase their expenses on homes and cars. As a result, the ratio of household debt to disposable income exceeded 170%. An interest hike from the central bank (possible even the next week) will make it more difficult for the borrowers to pay off their $1.5 trillion in mortgage debts.

In the same time, rate increase forecasts have cooled slightly because of a dark outlook for NAFTA negotiations. Last month, Bank of Canada Governor Stephen Poloz said high debt level made the economy more vulnerable to rate hikes than in the past. This month’s new mortgage rules also make it more difficult for certain buyers to afford a home purchase, and it will affect price growth, which has already weakened in Toronto and Vancouver recently.