What sort of risk does the housing market pose to the overall economy? It depends who you ask, but the Bank of Canada has now had its say.
Optimistic brokers may view this as a sign that mortgage market meddling is a thing of the past – for now, at least.
Bank of Canada Deputy Governor Lawrence Schembri
"The resulting strength in the housing market has increased household imbalances, but the risks stemming from these vulnerabilities have been well managed by complementary macroprudential policies," he said in a speech Tuesday, according to Reuters. "The experience in these countries therefore suggests that macroprudential policies that address structural weaknesses in the regulatory framework are best suited for mitigating such financial vulnerabilities."
Thos macroprudential policies include various mortgage rule changes by the federal government from 2008 to 2015, including – most recently – OSFIs B21 guidelines.
And while the various changes have caused difficulties for brokers, they are now being credited with protecting the market from instability.
“Recent evidence suggests that these measures have resulted in higher average credit scores, which have improved the quality of mortgage borrowing," said Schembri.
Still, brokers shouldn’t get too comfortable.
The Bank is still closely monitoring the housing market, according to Reuters.