The Bank of Canada has started to use YouTube to deliver their message to the masses.
The organization has been trying to warn the public in recent months about how indebted households and unreal expectations of the housing market are an indication of a great problem for the financial status of the country.
These messages however, have been to no avail.
In Toronto, house prices are up nearly 15 per cent since the summer. The Governor of the Bank of Canada, Stephen Poloz, has warned that price gains in the city are difficult to match with any fundamentals. There has never been a six month period during which the prices have risen that fast.
Another alarming statistic shows that the debt to income ratio of households has broken another record in the third quarter.
In efforts to approach people through YouTube, a video was released this Monday with the release of the bank’s semi annual financial system review. The video explains how the dangerous accumulation of debt can be the cause of a devastating blow to the economy of the country.
These were the points made in the video:
- House prices are rising while households are in debt.
- A negative chain of events can be triggered by such conditions which can lead to sharp increase in unemployment.
- Since households will be defaulting more on loans, houses will start being foreclosed by the banks.
- House purchases by new buyers will be delayed until the economy improves which would cause a huge drop in house prices.
- House prices falling would affect consumer spending which is one of the major drivers of economic growth.
The Bank of Canada is giving warning signs and is trying to reach as many citizens as they can by using different platforms. It is time for the public to take notice of this problem and start planning on how to act and improve the situation before a giant snowball of debt takes everything rolling downhill with it.