Silvia believes that Canadian households, being on the front line of interest rate adjustments, will encounter significant challenges ahead, leading him to doubt the likelihood of the Bank of Canada raising rates further.
The central bank’s report revealed a significant increase in the median debt service ratios (DSRs) for homebuyers.
The DSR rose from 16% to over 19% last year, while the proportion of new mortgages with a DSR exceeding 25% surged from 12% to 29%.
These statistics indicate a decrease in financial flexibility for Canadian borrowers.
When asked about the possibility of North American central banks alleviating these pressures through rate cuts, Silvia dismissed the idea.