Bank of Canada comments in a report on financial system vulnerabilities.

  • Vulnerability associated with high housing prices increased over the past year
  • Too early to tell whether the recent decrease in housing resale activity and prices will be temporary or the start of a substantial correction
  • Some Canadians who took out mortgages in 2021-22 could see monthly payments jump by 45% in 2025-26
  • Those who entered housing market over last year would be more exposed in event of a significant price correction
  • Vulnerabilities related to high house prices and elevated household indebtedness increase downside GDP risks
  • Risk of a further disorderly repricing of risk remains, which could lead to much tighter financial conditions globally and in Canada

Housing is a big risk for the loonie.