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OTTAWA, March 31 (Reuters) – Bank of Canada Governor Tiff Macklem, speaking in a newspaper interview, said on Wednesday he was seeing worrying signs that household debt was getting worse then that house prices continued to soar.
Macklem’s comments to the Financial Post mark the second time in less than a week that a senior bank official has worried about house prices in Canada, which jumped 25% in February from a year earlier .
“If you look at household debt, you see, on average, that loan-to-value ratios are increasing, especially in the uninsured sector. This suggests that Canadians are stretching and that is worrying, ”the newspaper said, quoting Macklem as saying.
Macklem also said he was also concerned about signs that people were starting to speculate in the housing market. “It would be a mistake,” he said, noting that the recent price hikes were not sustainable.
The newspaper said Macklem stopped before suggesting that a policy response was needed on the grounds that “from our point of view, monetary policy is a blunt tool … we have to look at the whole economy.”
Canadian Finance Minister Chrystia Freeland said last week she was monitoring housing markets “very, very closely”. (Reporting by David Ljunggren; Editing by Chris Reese and Alex Richardson)