The Organization for Economic Co-operation and Development (OECD) pointed at low interest rates as the main factor aggravating price growth and household debt, in its latest economic outlook released on Wednesday (June 1).
As reported by Jesse Ferreras of The Huffington Post Canada
, the OECD pressed the Canadian federal government to act on tighter housing regulations, in the wake of renewed predictions that any correction in the most inflamed markets of Vancouver and Toronto would introduce “main domestic downside risk”.
Scotiabank, which has “eased off” on mortgage lending in the two cities, agreed with the OECD assessment, adding that soaring debt is a growing concern that remains unaddressed.
The bank remained optimistic of the housing sector’s prospects, however, despite the troubling signs.
“[Generally], Canadians have a strong ability to self-regulate and they've demonstrated that before,” CEO Brian Porter told Bloomberg
earlier this week.
Measures introduced by Finance Minister Bill Morneau last year, which took into effect back in February, now compel borrowers to make a 10 per cent down payment for home loans worth $500,001 to $1 million.