Canada's banking system is under risk?
Experts note possible risks.
The Bank of Canada points to household debt as a key risk in the country's financial system.
Due to the increased expense of servicing mortgage loans, homebuyers have become more reliant on credit cards. Cards debts have exceeded pre-pandemic levels
Therefore, the Bank of Canada has identified "early signs of financial stress" among Canadian households as a risk. And rising interest rates have led to higher household spending, and this could be a major factor in the recession.
"Elevated interest rates and declining house prices have reduced the financial flexibility of many households," the Financial System Review says.
The increase in costs will be highest among those households with fixed-rate mortgages, which will see their payments increase by 20 to 25 per cent in 2025 or 2026.
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