Home prices in Canada rose steadily for years with few price corrections, then surged during the Covid pandemic when interest rates dropped to rock-bottom levels.
Photographer: Christinne Muschi/BloombergCanada’s main banking regulator flagged elevated borrowing costs as a growing risk to the country’s financial system, as housing and commercial real estate remain top vulnerabilities.
The Office of the Superintendent of Financial Institutions said higher interest rates are pressuring retail, corporate and commercial borrowers when it comes to their ability to service debt, according to a report released Thursday. It also sees signs that credit quality is deteriorating, especially in the commercial real estate sector.
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Canada Bank Watchdog Flags Risk of Higher Borrowing Costs