Bank of Canada's Carolyn Rogers warns against ‘tinkering’ with mortgage market

The Bank of Canada's Senior Deputy Governor, Carolyn Rogers, has issued a caution against making abrupt changes to Canada’s mortgage market, emphasizing the importance of stability during uncertain economic times. Rogers highlighted that while mortgage policies should evolve to meet economic challenges, overly reactive measures could inadvertently harm the housing market and broader economy.

Rogers’ comments come as Canadian households face the strain of high interest rates, which the central bank implemented to combat inflation. These higher rates have significantly increased the cost of borrowing, leaving many mortgage holders with less disposable income. Despite these challenges, Rogers warned that "tinkering" with the system, such as introducing sudden policy shifts, could destabilize the housing market further and undermine financial institutions' resilience.

The Deputy Governor also pointed out that Canada’s current mortgage framework is designed to absorb shocks, as evidenced during the pandemic when mortgage deferrals and government aid helped many Canadians navigate financial hardships. Maintaining a robust system that balances flexibility and stability is essential for long-term economic health, she explained.

Her remarks come amid growing public debate over whether stricter regulations on mortgage lending or support for struggling homeowners might ease the pressure. Critics argue that high borrowing costs are pushing more Canadians toward financial distress, yet experts, including Rogers, stress that overly lenient measures could fuel further inflation or housing market imbalances.

This measured approach aligns with the Bank of Canada's broader mandate to ensure sustainable economic growth and financial stability. Policymakers are mindful that the real estate sector plays a critical role in Canada’s economy and that sudden interventions could have unintended consequences.

As interest rates remain high, the focus remains on carefully calibrated adjustments rather than wholesale changes to the mortgage system. Rogers’ warning underscores the complexity of managing economic recovery while avoiding actions that could destabilize key markets.