As you implied, monetary policy is a macroeconomic tool, and it should be managed in a way so as to support the economy as a whole. The demand is now very strong in the real estate market. For the most part, we are all working from home. Our children are studying at home. Our leisure activities are taking place at home.
Canadians want more space because they are home all the time. In addition, they no longer need to go to work. Many of them are thinking that, in the future, even after the pandemic, working conditions will be more flexible. They are prepared to move further away from downtown, to the suburbs of major cities. So we are seeing a surge in demand, and the supply is slow to catch up, so home prices are rising.
We predict that the supply will meet the demand and that the market will become more balanced, but it will take time. There are risks involved, especially if home owners think that the price increases we have been seeing will continue. They risk taking on mortgages that are too high for their means.
However, measures have been taken. For example, the Office of the Superintendent of Financial Institutions, or OSFI, recently announced changes to its 2020 guide, and that's a good idea. It creates some dynamism. There is talk of a minimum mortgage rate. However, when interest rates are very low, as they are now, the likelihood of them increasing in the future is higher. Canadians should be protected against that risk.
The federal budget also contains a few initiatives that can increase the housing inventory, and that will also be useful.