Canada’s housing market is now in a “well-balanced territory” after cooling due to tightened mortgage-lending rules, Royal Bank of Canada’s CEO said.
“The housing prices and resale-market corrections are generally healthy,” David McKay told BNN Bloomberg on Thursday, citing the number of homes being built and going up for sale and how long they’re staying on the market. “I wouldn’t want to see some markets cool a lot more than they have, but we needed to slow this down through policy.”
Construction of condos and single-family homes is likely to slow over the coming year in response to potentially lower demand, McKay said. His comments came as industry groups pushed federal officials to revisit mortgage stress-test rules, which contributed to a rapidly cooling market and made it harder for first-time buyers to buy homes.
“It’s taken a number of buyers out of the market temporarily as they build a greater down payment for that mortgage, it’s cooled housing prices, but it’s all about balancing supply [and] demand, and, like every policy, it’s not static,” McKay said about the stress test. “Maybe you have to re-look at parts of it and tweak it.”
McKay also said that he sees a low chance of significant interest-rate cuts by the Bank of Canada, even as the US Federal Reserve is poised to make one of its own, according to Bloomberg.