OTTAWA – Bank of Canada governor Tiff Macklem says the central bank is seeing early signs that people may be purchasing homes solely because they believe prices may go up.
Macklem says rising prices in particular for single-family homes are still a long way from the heated market the country observed about five years ago.
Fuelling the increase has been a combination of demand for more space as millions of workers do their jobs remotely, constrained supply and rock-bottom interest rates driven low by central bank actions.
The bank’s key policy rate has been at 0.25 per cent for about 11 months, and its quantitative easing program is trying to reduce the rates paid on things like mortgages to drive spending.
Macklem says the central bank is surprised by the rebound in the housing market.
He adds there are early signs of what he called “excess exuberance,” with people maybe expecting the recent increases in prices to go on indefinitely.