OTTAWA (Reuters) – Bank of Canada Governor Tiff Macklem, speaking in a newspaper interview, said on Wednesday he saw worrying signs that household indebtedness was worsening as housing prices continue to soar.
Macklem’s comments to the Financial Post mark the second time in less than a week that a senior official at the bank has expressed concern about housing prices in Canada, which jumped by 25% in February compared with a year earlier.
“If you look at the household indebtedness, you are seeing, on average, the loan-to-value ratios are getting higher, particularly in the uninsured space. That suggests that Canadians are stretching and that is worrying,” the newspaper quoted Macklem as saying.
Macklem also said he was also concerned about signs people were starting to speculate in the housing market. “That would be a mistake,” he said, noting recent price jumps were not sustainable.
The newspaper said Macklem had stopped short of suggesting a policy response was necessary on the grounds that “from our perspective, monetary policy is a blunt tool … we have to look at the whole economy”.
Canadian Finance Minister Chrystia Freeland last week said she was watching housing markets “very, very closely”.
(Reporting by David Ljunggren; Editing by Chris Reese and Alex Richardson)