In its latest Annual Risk Outlook, released on April 14, the Office of the Superintendent of Financial Institutions (OSFI), Canada’s banking regulator, identifies real estate secured lending and mortgage risk as the top threat facing the financial system. The regulator expects residential mortgage arrears and defaults to rise over the next two years. This warning underscores a question that deserv...
The strongest version of this narrative is that Canada’s household debt crisis is not just about sustainability but about the misallocation of capital. The article effectively dismantles the "mortgage myth"—the idea that leveraged homeownership is inherently productive—by showing how borrowed capital flows into existing housing rather than new productive assets. This reallocation is evident in the declining share of GDP dedicated to machinery, equipment, and intellectual property, which has halv...