Non-performing household loans and associated provisioning at Canadian financial institutions are thus increasing, although the deterioration in credit quality is being mitigated to some extent by the decline in effective borrowing rates (Chart 11).
The Bank has conducted a partial simulation exercise to estimate the impact on household balance sheets of a more severe economic downturn than currently envisaged, which would  2  Given where we are in the current crisis, it should also be Augustinian; that is, new requirements should be phased in over time to avoid deepening the recession because of procyclical deleveraging.