Finance Minister Jim Flaherty warned again on Monday the government could tighten mortgage rules further if needed, after a report showed the country's household debt levels have soared.
"As I've said before, if necessary, we will tighten the mortgage rules again. We keep an eye on the level of credit," he told reporters.
But Ottawa is not about to take immediate steps to curb household borrowing, he said, based on discussions with banks about default rates. The government has recently tightened mortgage rules twice.
"There is no reason for extreme concern now. There is reason for concern, so I watch," Flaherty said.
"Part of what I have to do is balance the amount of credit we see out there with the job creation that we see in the economy as well."
Colin Dreyer, President and CEO of Verico Financial thinks Canadians aren’t being given enough credit when it comes to fiscal responsibility.
“It seems to me that Canadian consumers are somewhat self regulating in terms of being fiscally responsible," Dreyer told Mortgage Broker News. "I think a further tightening of the mortgage rules at this time is not necessary as residential sales are already moderating based on the existing economic conditions.”
Earlier on Monday, Bank of Canada Governor Mark Carney flagged his concerns over household debt levels, which according to a Statistics Canada report on Monday surpassed household debt levels in the United States in the third quarter.
A lengthy period of low interest rates has prompted Canadians to rack up debt faster than their disposable income is growing. For the first time in 12 years, Canadian households now have a higher debt-to-income ratio than those in the United States. It hit a record 148% in the third quarter, new Statistics Canada data show.
Rick Moran, AMP, OMB # M08001997
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