MNI BRIEF: Canada Mortgage Debt Tops CAD2 Tln As BOC Tightens

Canadian mortgage debt topped CAD2 trillion in April, the government statistics office said Friday, more evidence of the frothy housing market that had given the BOC some hesitation about how fast it can raise interest rates without shocking consumers.

Mortgage debt rose 0.7% to CAD2.004 trillion, continuing its climb as the Bank hiked 50bp to 1%, a move followed up earlier this month with another 50bps. Canada's housing market is one of the world's most overheated and mortgage debt has nearly doubled over the last decade.

Canada faces the risk of a hard landing on a surge in the money supply combined with a slow response to budding inflation, a former BOC research fellow has told MNI. (See: BOC Needs Faster Hikes, Risks Slump). Total consumer debt was 106% of GDP in the first quarter.