International banking body warning over Canadian debt, housing

Rising property prices and the potential for higher interest rates are among risks to Canada’s financial sector according to an international body of central banks.

The Bank for International Settlements warns that Canada’s elevated level of credit-to-GDP, which at 17.4 per cent is well above the organization’s “closely watch” threshold of 10 per cent; puts the economy in danger of a financial crisis.

Although its quarterly report says that the level of debt is manageable currently, it warns that a rise in interest rates at 250 basis points (2.5 per cent) could cause a crisis.

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