Canada's Housing Affordability Crisis: A Threat to Financial Stability

Canada is facing a housing affordability dilemma that affects both buyers and renters. Housing prices have become intertwined with household wealth, financial stability, and economic growth.

The Bank of Canada has noted that mortgage debt makes up the largest share of household borrowing, with home equity underpinning much of household net worth and access to credit.

Creditors are heavily exposed to residential mortgages, with about half of all bank lending tied to residential real estate. This means movements in house prices can affect lending across the economy.

The Bank of Canada's Governor has spoken out on this issue, acknowledging that it is not just a matter of affordability but also of financial stability and economic growth.