The country’s housing market and high levels of consumer indebtedness are still top concerns for the financial system, but in a report by The Canadian Press, the Bank of Canada said that these are slowly easing.
Several measures have been undertaken by the central bank to control such risks. They announced new rules on federal mortgage lending, wherein the bank introduced a test for borrowers who had not previously been subject to stress testing and do not require mortgage insurance.
The Bank of Canada is also set to monitor the extent to which borrowers look for alternative lenders, namely credit unions and private lenders.
As for the housing market, the bank disclosed that while the housing price growth fell in the Greater Toronto Area, condominium markets in Toronto and Vancouver remain strong.
However, adding to the key concerns is the recently identified cyberattacks. Two of Canada’s biggest banks warned that personal and financial information of up to 90,000 customers may have been accessed by “fraudsters.”
Moving forward, consumers should expect a raise in interest rate from the central bank later this year. It has already increased the interest rate three times since the previous summer, which have been followed by hike in prime rates from other big Canadian banks. Additionally, the cost of new fixed-rate mortgages has also increased in recent months as bond yields spiked up.
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