The Bank of Canada says the housing market and the amount Canadians owe remain the top vulnerabilities for the financial system, but are showing signs of easing.
The central bank says the worries about household debt have begun to pull back, but because of the sheer size of what is owed, it will remain a concern for some time.
The assessment came in the Bank of Canada’s latest financial system review, which assesses vulnerabilities that could amplify or propagate economic shocks.
The central bank says higher interest rates and tighter mortgage lending rules are restraining credit growth, but added it is too early to assess the full effects of the most recent changes on lending.
It also warns that although household credit growth has slowed, indebtedness remains high.
In addition to household debt and the housing market, the report also identified cyberattacks as the third main vulnerability.