Canada's Housing Bubble

Oct 07, 2010 Tavia Grant theglobeandmail.com

Debt, schmebt. Concerns have been growing over the debt-laden Canadian consumer, to a point where the Bank of Canada has flagged it last week and consumer confidence is sagging because of it.

Don't panic, says Bank of Montreal in a new report. It says a household balance sheet "repair" is quietly underway, as savings rates rise and equity markets recuperate. It says debt growth -- which ballooned through the recession -- is set to moderate as the housing market cools. Zooming in on debt levels "portrays an overly negative picture of Canadian household finances, which have proven incredibly resilient this cycle and likely still have enough cushion to provide a soft landing for spending in the year ahead."