Carney stays positive about housing

Bank of Canada Governor Mark Carney is still concerned that home prices could drop more sharply than expected and exacerbate the growing debt burden of many households – but he doesn’t see it as very likely.

Speaking to the House of Commons finance committee Tuesday, Mr. Carney said the slowdown in housing is unfolding as the central bank expected it would, given the tighter mortgage rules brought in by the Finance Department earlier this year and the fact more Canadians are retrenching after spending and borrowing with abandon amid record-low interest rates.

Still, he warned, a quicker, less measured drop is a possibility. Should that happen, it would almost certainly mean Canada would see slower economic growth than Mr. Carney’s latest forecasts, which included downgrades for five consecutive quarters.

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JEREMY TOROBIN

OTTAWA— From Wednesday's Globe and Mail

Published Tuesday, Oct. 26, 2010 6:59PM EDT

Last updated Wednesday, Oct. 27, 2010 1:52PM EDT