In the face of rapid rising prices in Britain, Mark Carney’s track record in Canada is coming under more scrutiny. And he’s fighting back by suggesting that Canada’s problems are peanuts next to those in the U.K.
In an interview with Sky News, Carney, the forrmer Bank of Canada chief said that “we could do more” to keep a lid on the British housing market, including limiting certain types of mortgages and ensuring individuals could afford loans at much higher interest rates.
“The issues around the housing market in the United Kingdom, the longer-term structural issues I think you know, there are not sufficient houses built in the U.K.,” he added. “To go back to Canada, there are half as many people in Canada as in the U.K…twice as many houses are built every year in Canada as in the U.K., which just gives you a sense of the orders of magnitude of the supply problems.”
For his part, current Bank of Canada Governor — and successor to Carney — believes the Canadian housing market will experience a soft landing.
“Trends we continue to expect a soft landing for the housing market and Canada’s household debt to income ratio to stabilize,” Poloz in a late April address. “Nevertheless, the imbalances in the housing sector remain elevated and would pose a significant risk should economic conditions deteriorate.”
Poloz credited smarter lending habits and more careful underwriting.
“We are observing, anecdotally at least, an increased awareness of this risk. Consumers are showing responsibility; for example, home buyers who opt to buy less house than they qualify for so they don’t find themselves overextended if interest rates rise,” Poloz said at the time. “Banks, as well, are underwriting loans more carefully, ensuring that people can service their debts if rates go up.
“So, while the risk could be significant, we are comfortable that it is not outsized.”