For the average person, it would seem the only option for affordability; prices are high so mortgage rates have to be low. However, for the greater economy this raises the warning signs.

The Office of the Superintendent of Financial Institutions’ deputy superintendant has told a housing conference that lenders are more exposed now than they were a decade ago; just a few years before the crisis hit.

Mark Zelmer said that although household credit was down, indebtedness is near record levels and it’s unlikely that incomes will rise significantly.

Banks, although mostly in good shape at the moment, could be at risk as 60 per cent of their lending is in real estate. Zelner says banks need to ensure they are lending wisely and be aware of the potential of a downturn in the market.

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