Back in October 2020, I tweeted “Unpopular view, but the next move for Canadian housing could be an absolute face ripping rally higher.” To be honest, I was hoping I would be wrong but the data doesn’t lie. The bearish thesis on Canadian housing was always about bank lending. Everyone assumed banks would tighten credit due to the ongoing economic destruction and mounting job losses. However, it turned out to be the opposite. Aided by Government policies, banks ramped credit creation into overdrive, funneling massive amounts of new credit into the housing sector. The bulk of new credit that banks created was done by issuing new mortgage loans. The banks stoked a credit boom to inflate prices and stave off a downturn in the housing market and the economy. It really is that simple.