Canada’s housing affordability crisis has grown so massive that monetary policy alone cannot solve it — and attempting to do so risks creating new economic problems, according to Carolyn Rogers, Senior Deputy Governor of the Bank of Canada.
Speaking at the Greater Victoria Chamber of Commerce, Rogers delivered a sobering reality check: the central bank’s tools are simply too blunt for a problem rooted in structural supply shortages and decades of policy decisions that have tied household wealth directly to rising home prices.
The numbers tell a stark story. Between 2015 and 2025, home prices surged 53% while incomes grew just 13%. Residential investment now accounts for nearly half of all bank lending — a dangerous concentration that means housing market movements ripple across the entire financial system.
Rogers explained that interest rate adjustments inevitably create trade-offs: lower rates ease monthly mortgage payments but fuel demand in a supply-constrained market, while higher rates tackle inflation but worsen affordability. Meanwhile, rates cannot directly build homes, rezone land, or accelerate permit approvals.
The real solutions, Rogers argued, rest with federal, provincial, and municipal governments — increased housing supply, better planning, infrastructure investment, and reducing Canada’s economic dependence on perpetually rising property values.
For GTA readers, this admission signals a fundamental shift: expect housing policy decisions to increasingly move beyond the Bank of Canada’s purview toward government action on zoning, development incentives, and supply-side interventions.
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