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With Great Power Comes Great Responsibility; Macroprudential Tools at Work in Canada

Ivo Krznar and James Morsink

No 14/83, IMF Working Papers from International Monetary Fund

Abstract: The goal of this paper is to assess the effectiveness of the policy measures taken by Canadian authorities to address the housing boom. We find that the the last three rounds of macroprudential policies implemented since 2010 were associated with lower mortgage credit growth and house price growth. The international experience suggests that—in addition to tighter loan-to-value limits and shorter amortization periods—lower caps on the debt-to-income ratio and higher risk weights could be effective if the housing boom were to reignite. Over the medium term, the authorities could consider structural measures to further improve the soundness of housing finance.

Keywords: Canada; housing market, mortgage insurance, macroprudential regulation, mortgage, mortgages, mortgage credit, mortgage loans, Government Policy and Regulation, General, (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-ias and nep-ure
Date: 2014-05-12
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