No Need To Tighten Mortgage Rules Further: Flaherty
“We just took action” in March and activity is already starting to moderate, Jim Flaherty said at a speech in Toronto.
Mr. Flaherty’s comments came after a strong warning on the housing market from Bank of Canada governor Mark Carney last week.
Without saying the word bubble, the bank governor said pockets in Canada’s housing market were showing signs of overheating. He singled out the possibility of an “overshoot in the condo market in some major cities” and “extreme” valuations in the Vancouver market, where the average price of a house rose in May by 25.7% to $831,555 over a year ago.
On Monday, Mr. Flaherty said he continues to monitor the country’s housing market, but said the situation remained stable.
However, the finance minister did warn that there could be “issues” for Canadian banks if the debt crisis in Europe is not resolved.
Mr. Flaherty said he is “hopeful accommodations can be made” and further problems can be avoided, but he declined to go into detail about potential consequences if there is no resolution.
Canadian banks have minimal direct exposure to Greek debt but there are concerns about soaring consumer debt and the heated housing market.
Some observers worry that situation leaves Canada vulnerable to external troubles such as Europe’s sovereign debt turmoil.