UPDATE 1-Bank of Canada says housing market cooler, still a risk

Wed Jun 26, 2013 3:00pm EDT
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* BoC watching housing, debt situation -Lane

* Rapid growth of mortgage securitization a key concern

* Canada's shadow banking sector small but needs monitoring

* No guidance on future path of interest rates in Canada in speech

By Peter N Henderson

TORONTO, June 26 (Reuters) - Canada's heated housing market and near-record personal debt is less of a risk than it was a year ago, but the central bank is not letting down its guard just yet, a Bank of Canada official signaled on Wednesday.

"We are seeing a moderation over the last year in both the buildup of household indebtedness and also the related imbalances in the housing market," Bank of Canada Deputy Governor Timothy Lane said in response to an audience question following a speech in Toronto.

"At the same time ... that's not to say that the risk has suddenly disappeared, and it's still a risk that we're watching very closely," he said.

Canada's housing market slowed dramatically in mid-2012 after the government tightened mortgage lending rules to head off a housing bubble. It was the fourth such move in five years. But the market has rebounded in recent months.   Continued...