17 May 2019

“In my opinion, we’ve been giving borrowers a chance to make their own stress tests for several years, as it was quite logical not to think that rates will remain as low forever”, – he said.

“But we didn’t see much reaction to it. That’s why I believe the rules are providing the necessary influence, and people are adjusting to them”.

Although the B-20 rules were named as one of the factors causing a sharp annual home sales decline in Metro Vancouver, Poloz says the influence is not so significant outside Vancouver and Toronto, where real estate prices had skyrocketed before the government decided to interfere.

“In the cities, which haven’t shown too high activity, borrowers are adjusting normally”, – he noted. “From Winnipeg to Ottawa, Montreal, Halifax, Moncton, the markets behave just the way we’ve planned. That’s why I believe the rules are working”.

While the BoC’s Financial System Review admits improvements when it comes to solving the vulnerabilities issue concerning consumer debt and housing market imbalances, it also points at the risk category of Canadians. According to the Bank, 42% of households may face difficulties with refinancing their mortgages in case real estate prices go down by 20%.