The Globe and Mail reports in its Thursday, April 22, edition that Bank of Canada Governor Tiff Macklem sees signs of "speculative behaviour" in the country's booming housing market and voiced concern over the pace of mortgage borrowing among highly indebted households.
The Globe's Rachelle Younglai writes that home prices have hit record levels across the country, with smaller cities and suburbs seeing real estate values jump more than 30 per cent over the past year.
Mr. Macklem said on Wednesday: "Our concern is that against a background of rapid price increases, people will extrapolate. They will expect that those price increases will continue indefinitely and they will overstretch to buy houses. That would be a mistake."
Federal policy makers have proposed incremental measures that could slow the market.
Mr. Macklem said he supported the banking regulator's plan to make it harder for borrowers to qualify for a mortgage, as well as Ottawa's proposal to slap a 1-per-cent tax on vacant homes owned by foreigners.
The proposal from the banking regulator would effectively require borrowers to prove they can make their mortgage payments at an interest rate of 5.25 per cent, up from 4.79 per cent.
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