While many concerns stem from the Canadian housing market, it will not see an American-style crash, a new Canadian Imperial Bank of Commerce report says.
House prices will likely fall north of the border in the next year or two, but a number of factors are likely to mitigate the impact on borrowers and the broader economy here, it suggests. It forecasts that the Canadian market will likely go through a soft landing, which is exactly what policy makers in Ottawa are hoping.
Factors that should cushion the damage that lower house prices could cause include a lower degree of speculation in the Canadian market, and higher quality mortgages, the report says.
The Canadian debt-to-income ratio in Canada recently rose above the level that it had been at in the U.S. prior to that country’s housing crash, a development that raised some alarm bells for a number of economists.
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