Rising household debt amid housing pricing soar – BOC governor
Bank of Canada Governor, Tiff Macklem, said on Wednesday he saw worrying signs that household indebtedness was worsening as housing prices continue to soar.
Macklem’s comments to the Financial Post mark the second time in less than a week that a senior official at the bank has expressed concern about housing prices in Canada, which jumped by 25% in February compared with a year earlier.
“If you look at the household indebtedness, you are seeing, on average, the loan-to-value ratios are getting higher, particularly in the uninsured space. That suggests that Canadians are stretching and that is worrying,” Macklem said in his interview with the Financial Post.
A summary of consultations says the majority of participants favored having the bank keep inflation at an annual target, finding steady and predictable price increases is best for their own financial planning.
The comfort zone the bank sets for its inflation target will help determine what happens to its key policy interest rate, which can affect the rates charged for mortgages and loans.