Rising interest rates will mean these people will have to spend more of their income servicing debt, leaving less for other goods and services. Clearly, given these elevated levels of debt, raising rates will have more of an impact on the overall economy than in the past. This is one reason why we have been gradual in our approach to raising interest rates.
Housing markets are adjusting not only to higher interest rates, but also to new mortgage guidelines and rules aimed directly at cooling certain housing markets. Given the unique situation, we are monitoring the impacts carefully. Housing activity has been a little weaker than we expected recently.