focused<\/a> on Macklem\u2019s comment that there were \u201csome signs\u201d of the market overheating during the Q&A segment of the session, BMO economist Benjamin Reitzes wrote that the governor \u201cdidn\u2019t sound too concerned\u201d about housing in his comments.<\/p>\nReitzes pointed out that Macklem said the signs the bank is currently seeing in the market are \u201cnot like what we saw in 2016 and 2017\u201d when multiple government measures were introduced to cool down what was viewed as a runaway housing market.<\/p>\n
While he believes the situation should be monitored \u201cvery closely,\u201d Macklem also said that, at this time, the Bank of Canada is not recommending any new measures for the housing market.<\/p>\n
A lot of weight is placed on the central bank governor\u2019s opinion of the housing market, which is why these speeches are closely watched by financial institutions, economists and business reporters.<\/p>\n
The Bank of Canada\u2019s key interest rate, currently sitting at a record-low of 0.25 percent, is a major influencer of consumer lending rates, including mortgage rates. As the key interest rate rises, mortgage rates typically follow along with it, though there are other important factors that contribute to these moves.<\/p>\n
The concern with keeping interest rates \u201clow-for-long\u201d is it will drive a run-up in home prices, with homebuyers and investors believing that prices will continue to rise indefinitely. This could result in buyers taking on too much debt and experiencing severe financial pain when interest rates do eventually rise.<\/p>\n
Looking ahead, Macklem said that the Bank of Canada will be paying attention to growth in Canadian household debt and looking for signs of \u201cextrapolative expectations,\u201d defined as when people expect the significant price surges the market has experienced recently to go on in perpetuity.<\/p>\n
![\"bank-of-canada-housing-market\"](\"https:\/\/www.livabl.com\/articles\/wp-content\/uploads\/2021\/02\/bank-of-canada-housing-market.jpg\")
<\/a>Photo:\u00a0Fabian Blank<\/a>\/Unsplash<\/a><\/em><\/p>\n