The head of the federal housing agency is raising a red flag about the state of Canada's real estate sector, saying affordability concerns have spilled over from the country's two most expensive cities to nearby markets.
CMHC CEO Evan Siddall says in an opinion piece published in the Globe and Mail that the agency will raise its overall risk rating for the national housing market to ``strong'' from ``moderate'' when it issues its housing market assessment on October 26th.
Siddall said high levels of debt combined with rising house prices are often followed by contractions in the economy.
He says CMHC is concerned about the conditions it observes in Canada.
Siddall's comments came the same day new mortgage rules introduced by Ottawa took effect.
The rules require a stress test for all insured mortgage applications to ensure borrowers can still repay their loans in the event interest rates rise or their personal financial situations change.