Source: The Canadian Press

Canada’s hot housing market will likely start cooling off this quarter and continue at a lower level of activity over the next few years, Bank of Canada governor Mark Carney says.

Carney told the House of Commons finance committee Tuesday that economic activity, including the housing market, has rebounded strongly from recession — perhaps too strongly in the case of housing.

But he said he expects activity in the housing market to slow in the current quarter.

“We see a marked weakening in housing over the course of our projection (into 2012), starting from the second quarter of this year and over the balance,” he said.

Lured by low interest rates, Carney said consumer credit has expanded despite poor economic times as Canadians both took out new mortgages or borrowed by using their homes as collateral.

But these extraordinary good borrowing conditions can’t last, he said, again warning consumers to consider their obligations over the entire course of a loan before taking on debt.

Canada’s chartered have already begun raising some rates, especially longer-term rates.

Carney gave no hint of when the Bank of Canada will start raising rates, although last week the central bank withdrew its conditional commitment to keep the policy rate at the record low 0.25 per cent until at least July.

Many economists interpreted the move as a signal the bank will raise the policy rate a quarter-point or even a half-point at the next scheduled announcement June 1.

The governor said the removal of the conditional commitment “in of itself represents a tightening.”