Although Governor Stephen Poloz was not sounding the alarm bells of an imminent crash, the report highlighted the slightly increased risk since a similar report six months ago.
Household debt is the main issue behind the concern with the bank noting that if jobs are lost and defaults on loans and mortgages increase, it could lead to decline in the housing market.
Long-term interest rates are also a concern.
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The Bank of Canada released its latest health-check on the state of the country’s financial system Thursday and warned, as it has before, that the housing market is one of the largest risks to stability.