Bank regulators warn that a housing crash will destroy Canadian economy

Currently, mortgage debts are equivalent to over 80 percent of Canada's economy. This means that a drop in housing prices could have severe implications for the entire country.

"A long-term trend towards growing household indebtedness persists and may indicate vulnerability in the Canadian economy and the financial system," said the bank regulators' annual report.

Despite this, housing prices are on the rise across Canada. This is particularly the case for metropolitan centres.

Having said this, Trudeau's Department of Finance has repeatedly dismissed the chances of a Canadian housing crash.

"Household indebtedness [poses] the largest risk for many federally-regulated financial institutions," wrote the report. "Covid-19 created severe pressure on household employment incomes."

Household debts are also on the rise in Canada, which is a sorry sign for the health of the economy overall. This will only be exacerbated by the high levels of inflation.

Inflation in Canada has reached 4.7 percent. This is the highest level in 18 years. Despite this, Trudeau has committed billions more in spending.

The Bank of Canada governor has suggested that inflation will run close to 5 percent, according to Blacklock's Reporter.

This is a steeper forecast than what the Bank of Canada was originally expecting, although the governor has not yet suggested that interest rates will be raised to counteract the inflation.

"We recognize inflation is actually likely to move a little higher in the remaining months of this year," said the governor on Wednesday.