Canada may need tougher rules to slow overvalued housing market, IMF warns
Canada may need tougher rules to slow gains in the housing market, the International Monetary Fund said.
Experts warn of danger ahead when these young people, who have no experience in interest rate shocks, face a spike in mortgage payments. Read on “High household debt and a still-overvalued housing market remain important domestic vulnerabilities,” the Washington- based group said Tuesday in its World Economic Outlook. Those risks “call for continued vigilance and may require additional macro-prudential measures.”
The report said that house prices are 10% above “fundamental values,” and “housing market risks should continue to be closely monitored.”
Finance Minister Joe Oliver said last week he doesn’t see a housing bubble in Canada, adding that past rule changes have been effective in curbing rapid price gains. While the IMF has called for the country to limit the use of government-backed mortgage insurance to limit taxpayer risk, Oliver said that any future steps he takes will be gradual.