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The head of one of Canada's largest banks is concerned about the high debt levels of Canadian households and a slowdown in the country's booming housing market.
"We need to see a soft landing here," Colleen Johnston, CFO at TD Bank, tells BNN. "So we're supportive of many of the measures underway right now to tap on the brakes."
Johnson says that while the Canadian banks have large real estate portfolios, their losses have been minimal. TD has more than $200 billion in Canadian real estate secured lending and its losses were $20 million, just one basis point, she says.
"Even if you stress test that pretty hard, it's difficult to come XX with a number that in any way would hurt the bank," she says.
She says a big question mark for the banks is how they are going to grow their business as the housing market cools.
"We're seeing it already as mortgage originations are slowing down and I think that's probably good for Canada," she says. "What's good for Canada is good for the banks."
Her remarks come as Canadian households continue their decade-long love affair with debt. Recent statistics show that that average Canadian household has a record debt-to-income ratio of 152 percent -- meaning they owe $152 on every $100 in earnings.
The Bank of Canada has recently called the household debt burden the biggest downside risk to the Canadian economy. Mark Carney, the governor of the BoC, has over the last year repeatedly warned Canadians about the impact rising rates will have on high debt levels.
Other bank executives have previously warned about record home prices. Bill Downe, president and CEO of the Bank of Montreal, told BNN at the beginning of the year that the housing market was looking increasingly shaky.
He highlighted, in particular, the condo market, warning that speculators in Toronto and Vancouver should not expect prices to continuously creep higher.
A recent study by BMO showed that around one in five households said a two-percent hike in interest rates would make it difficult to afford their home.