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Toronto’s million-dollar homes show the risks to the Bank of Canada’s flirtation with lower interest rates.

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Toronto buyers are turning to sub-prime lenders to reach the 20% downpayment needed for a bank loan, facing interest rates of close to 13%

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On the same day Governor Stephen Poloz signalled a January rate cut may be sufficient to offset the effect of lower oil prices on Canada’s economy, figures revealed the average price of a detached home in the city surged past $1 million for the first time.

A booming real estate market in Toronto and much of the country underscores the risk of combating the oil price shock with cheaper borrowing costs that may only fuel a housing bubble and aggravate household indebtedness.

“When you add all this stuff up, you are sort of left with the notion that monetary policy is a pretty blunt instrument for this,” said Mark Chandler, head of fixed-income research at RBC Capital Markets.