Think of it as “disaster preparedness” for the housing market.
Canada Mortgage and Housing Corporation ran a series of stress tests – to see how vulnerable the Canadian market could be.
One result showed house prices could drop as much as 30 percent – in the case of a sudden rise in interest rates.
Other scenarios included an American-style housing correction.
The agency also considered the possibility of a high-magnitude earthquake.
After assessing the various negative scenarios C-M-H-C says – the test results confirm that its capital holdings are sufficient to weather the storm.
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