Organization fears cash-crunched Canadians will stop spending
The Organization for Economic Cooperation and Development says Canadians who rushed to take advantage of low interest rates during the recession to purchase homes and other big ticket items could find themselves squeezed by “any future adverse shocks” now that the country’s economic growth is expected to slow. In its annual economic report, the agency warned that household debt levels need to come down and that the country’s hot housing market should be cooled. The Bank of Canada is already moving to make borrowing more expensive by hiking interest rates—an outcome that could make life more difficult for those who over-extended themselves by taking on hefty mortgages. “Housing looks overpriced on the basis of price-to-rent and price-to-income measures,” the report said.