The International Monetary Fund is warning that Canada should not relax housing regulations, saying that the country’s real estate market still needs to cool down amid high consumer debt levels.

The organization’s report Tuesday comes as Vancouver and Toronto’s real estate boards have been calling on the federal government to ease its B-20 mortgage guideline that was introduced at the start of 2018. The rule imposed new stress tests for uninsured mortgages, in which borrowers make a down payment of at least 20 per cent on a home purchase.

“Several rounds of macroprudential measures, provincial and municipal tax measures, and tighter monetary policy have contributed to a reduction in housing-related financial stability risks,” the IMF said in a statement following an official mission to Canada.

“The government is under pressure to ease macroprudential policy or introduce new initiatives that buttress housing activity. This would be ill-advised, as household debt remains high and a gradual slowdown in the housing market is desirable to reduce vulnerabilities.”

The IMF’s call comes after Bank of Canada Governor Stephen Poloz told BNN Bloomberg last week that he “would frown upon” policymakers loosening certain housing rules. The policies are having an important effect and Canadians are adapting, Poloz said.

The IMF also reiterated its recommendation that all levels of Canadian government need to work together to address housing supply issues, adding that the federal budget’s plan to examine rental and homeownership trends through the Expert Panel on the Future of Housing Supply and Affordability is a helpful step.

“To alleviate vulnerabilities in the housing market on a more durable basis, macroprudential policy should be complemented with a broad set of supply-side policies,” the report said. “Municipal, provincial and federal authorities need to work together to develop and implement a comprehensive housing supply strategy to increase density and alleviate construction bottlenecks.”

Still, a key domestic risk for Canada’s financial stability and growth could be a sharp correction in the housing market, the IMF said.

“If a house price correction is accompanied by a rise in unemployment and a collapse in private consumption, additional risks to financial stability and growth could emerge,” the IMF said.