The Bank of Canada is working to slow the growth of household debt and cool the country’s housing market but it may be years to stabilize, says outgoing Bank of Canada governor Mark Carney.
▲ Hide Transcript
▶ View Transcript
We pulled Thomson Reuters financial clients ask them what they wanted me to ask you and one of the top question. That actually James Glassman of JPMorgan. Wanted me to ask is is they're housing bubble in Canada. Is that. The big concern of yours and if you -- bursting that. Your problem concern of the banking candidate and it has been concern and that the government -- -- and the regulator for the last couple years has been the pace of growth of household that. Which has been related to dynamics in the housing market not exclusively mark -- recently it. And to a number of measures have been taken to slowed that pace the pace of growth is gone from 13%. You know per -- to just over 3% now so it's come down quite nicely. Others in four sets of macro credential moves taken by the government tightened underwriting standards of the regulator has. We have. Conducted monetary policy in we think it pretty transparent way. That has has highlighted the risks to this and the potential consequences for the path of interest rates in other words that could be higher sooner if if this isn't addressed there just hasn't adjusted. In a timely way Amelie missed and I absolutely Canadian families from the point. As these measures were put in place -- -- -- 11 there's just the the realities of where that grosses as has gone down. But the second thing is that variable mortgages for example. We're running about two thirds of mortgages were terrible rates. Before. There was a concerted effort at the middle of last year but this time last year by the bank by the government files the now let's put down to 10% to 10% of the -- mortgages since that point. It's a cliff. Have been right -- all right so that's just another indicator is if you if it is in the area as a consequence of that. There has been an adjustment activity in the housing -- -- to go back here. Question here here you are underclassmen question remember that. What the the you know we we use C valuations in the housing market has been quite firm and and and very firm in some markets them. We we have seen an adjustment in those prices. And we are now seen household debt levels stabilize. We'll be that high levels that things are moving in the right direction. Including on the on the on the new builds on them housing starts. How much more they happened how much hair still need to let. It's I think this is -- it's a and adjustment that best take place over a couple of years. We have highlighted. That we feel very constructive revolution. Of dynamics and -- that and in the housing market thus far I'm so we feel. The collective. Suite of policies have been the right ones getting the adjustment that we need. And as a consequence to bring back your first question. For the Canadian economy took -- to move from a sort of one and half percentage point pace of growth in 22 and there's. We're gonna need to see a pick up on investment and exports to fill in the gap that's left from -- but that's that's entirely. That's our report.