Bank of Canada Governor Tiff Macklem went on the offensive offering reassurance that interest rate in Canada will remain low for at least the next 2-years. Other government officials and real estate and mortgage bankers warned that such reassurance could spark a wave of speculative demand in the country’s hottest housing markets. Macklem’s comments on Wednesday also appeared to have put the central bank at odds with the government’s mortgage agency, which last month tightened mortgage insurance rules for riskier borrowers to help curtail “excessive demand and unsustainable house price growth.” John Pasalis, president of Realosophy Realty, summed up realtors’ concerns when he said that while it was normal for central banks to encourage borrowing during economic downturns, Macklem’s explicit message to take on mortgages would likely encourage speculative buying. “When investors dominate the market, prices get inflated beyond where they should be,” he said.
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