The Canadian government is watching the housing market closely and is ready to intervene if needed, but is not about to do so now, Finance Minister Jim Flaherty said today, Tuesday, noting he saw indications of softening in the market.He was speaking to reporters after the Bank of Canada said that very favourable credit conditions were expected to buttress housing activity, and that Canada’s ratio of household debt to income was expected to rise further.
Asked if he had expressed concern with the banks about record-low mortgage rates, he said: “I have frequent discussions with the bank leaders including some of them yesterday in Toronto.”
Data this week showed existing homes sales rose only slightly in Canada last month, while the average sale price declined, offering further evidence the once hot market is cooling.
Canada’s housing sector, which did not experience the subprime mortgage boom and bust seen in the United States, played a key role in lifting the economy out of recession as ultra-low interest rates drove sales and prices higher.
But policymakers have voiced fears the market’s post-recession boom, combined with a long run of low lending rates, could create an asset bubble. The Canadian government tightened mortgage rules several times to cool the market.
Cautioning consumers, Mr. Flaherty reiterated on Tuesday that Canadians must not assume interest rates will remain low for a long time.
Financial Post, Tuesday, January17, 2012.
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