IMF Working Papers

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

By Ivo Krznar, James Morsink

May 12, 2014

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Ivo Krznar, and James Morsink. With Great Power Comes Great Responsibility: Macroprudential Tools at Work in Canada, (USA: International Monetary Fund, 2014) accessed November 8, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Credit, Financial institutions, Housing, Housing prices, Insurance, Loans, Money, Mortgages, National accounts, Prices

Keywords: Credit, Global, Guarantee cover, Housing, Housing loan, Housing market, Housing prices, Loan, Loans, LTV, LTV ratio, Macroprudential regulation, Mortgage, Mortgage credit, Mortgage insurance, Mortgages, Risk weight, WP

Publication Details

  • Pages:

    38

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2014/083

  • Stock No:

    WPIEA2014083

  • ISBN:

    9781484383445

  • ISSN:

    1018-5941

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