Quote:
Originally Posted by whatnext
The BOC acts on its own, and they are so over-focused on the stagnant economy that the Liberals had to effectively raise interest rates by expanding the mortgage stress test.
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i get what you mean, but the new stress tests didn't "effectively raise interest rates," it just made it so that mortgage borrowers will be clocked on their ability to pay in the event that interest rates rise. everyone wants interest rates low, and they're insulated against change because they want to ensure healthier household debt levels.
on the idea that they shouldn't have intervened because eventually the housing market would decline, this is pretty weak. high debt levels mean slower economic growth, which in vancouver looks like a cycle of low wage growth but increasing housing costs, eating up consumer spending power, which means slower economic growth. that's simplistic, but it holds true.
edit: it occurs that now that the foreigners and speculative buying are finally being addressed, and the stress test will push down available insured mortgage for most households, vancouver could go in for the kill by rezoning a large number of single family homes districts. the rationale is that towers much more expensive to build relative to 5-6 story wood-framed structure, and that adding a lot more land for developers to build these will deflate the value of land, citywide.