reads an IMFBlog post<\/a> from August 7th.<\/p>\n\u201cIn Toronto and Vancouver, declines in house prices reduced speculative \u2018froth\u2019 but prices remain overvalued,\u201d the post continues.<\/p>\n
The IMF suggests policymakers have been successful in attempts to curb out-of-control borrowing, thereby reducing risks posed to the country\u2019s financial system.<\/p>\n\n
In January 2018, federal policymakers implemented tougher lending rules for the uninsured mortgage segment. From then on, uninsured mortgage applicants have had to qualify at either the Bank of Canada\u2019s benchmark rate or a rate that is 200 basis points above what their lender is offering \u2014 whichever is higher.<\/p>\n
While the Canadian household-debt-to-disposable-income ratio is 176 percent \u2014 meaning Canadian households owe $1.76 in credit market debt for every dollar of disposable income they have \u2014 a more balanced housing market has assuaged vulnerabilities, says the IMF.<\/p>\n
Comments made by the CEO of an alternative lender on the same day the IMF published the blog post also refer to market stability.<\/p>\n
\u201cThe latest data on economic growth, employment and interest rate expectations are consistent with our outlook for a stable and balanced real estate market for the rest of 2019,\u201d Home Capital Group CEO Yousry Bissada told analysts on a conference call.<\/p>\n
And in a Friday morning note to clients, BMO Senior Economist Robert Kavcic also honed in on current mortgage market conditions as a stabilizing presence.<\/p>\n
Five-year fixed-mortgage rates have fallen 80 basis points compared to fall 2018 highs. \u201cThis is one big factor behind the sudden stability in Toronto\u2019s housing market, tentative signs of firming in Vancouver, and the upturn in residential mortgage credit growth in recent months,\u201d he explains.<\/p>\n
With observers throwing the s-word around, it may be easy to ignore the risk profile \u2014 but the IMF did note that the market isn\u2019t bulletproof.<\/p>\n
The IMFBlog post concludes by referring to its earlier economic assessment of Canada, which didn\u2019t gloss over risks.<\/p>\n
\u201cA sharp reversal in housing market prices, particularly if accompanied by a rise in unemployment and a collapse in people\u2019s consumption, could spark additional risks to financial stability and growth.\u201d<\/p>\n
![\"\"](\"https:\/\/www.livabl.com\/articles\/wp-content\/uploads\/2019\/08\/toronto-canada-housing-market.jpg\")
<\/a><\/p>\n