The Office of the Superintendent of Financial Institutions (OSFI) has warned that elevated borrowing costs represent a growing risk to the country’s financial system, with housing and commercial real estate in particular being areas of extreme vulnerability.
“The most significant developments [this year] are a domestic inflation rate that remains above the Bank of Canada’s target rate, the resulting monetary policy tightening and elevated interest rate environment, and signs of weakening credit quality, particularly in the commercial real estate (CRE) market,” the regulator said in the semi-annual update of its Risk OutlooK.
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