The International Monetary Fund points to rising household debt and recommends government action soon. Finance minister Jim Flaherty says no further mortgage tightening is needed now.
IMF warns in its latest regional outlook for the Western Hemisphere that Canadian household debt reached 147 per cent in Q2 and is heading towards 151 per cent in 2013. The report considers an appropriate ratio to be between 138 and 142 per cent.
While the Canadian economy is stronger than US or EU economies, continuous debt buildup may represent problem. While Julie Dickson, superintendent of Financial Institutions (OSFI), recently said they are “stepping in to increase the monitoring of home loans and lines of credit secured by real estate," finance minister Jim Flaherty is not considering further mortgage tightening after the latest round earlier this year. “It will take clear evidence of a bubble in the housing market in Canada, which we have not seen,” he said.
While real estate markets in most provinces are advancing moderately, the average price of Vancouver real estate grew by 17 per cent on a year-to-year basis, driven mainly by demand from foreign investors. Phil Soper, president and CEO of Royal LePage, told CRE online: "Vancouver is being influenced at the margin by foreign investment. I believe that that is a sustainable scenario.”