, residential mortgage credit and monetary policy, ” bank of canada, december 2004 ( available at : http : / / www. bankofcanada. ca / en / conference _ papers / housing _ macroeconomy / roi. pdf ) ; and j. campbell and j. f. cocco, “ how do house prices affect consumption? evidence from micro data, ” ( harvard institute of economic research working papers no. 2045, 2004 ) see l. pichette, “ are wealth effects important for canada? ” bank of canada review ( ottawa, bank of canada, spring 2004 ). available at : http : / / www. bankofcanada. ca / en / review / spring04 / r04 - 2 - ec. html part of the increase may also reflect the general aging of the population. microdata indicate that from 1999 to 2009, the share of home equity lines of credit ( helocs ) held by households in the 50 - plus age group increased from 33 per cent to 54 per cent. bis central bankers ’ speeches household finances and financial stability household finances also have important implications for financial stability. while the rapid expansion of household credit during the recession and the early stages of the recovery is in part a testament to the resilience of canada ’ s financial system, it is also a source of risk. as discussed in the bank ’ s most recent financial system review, the proportion of households with stretched financial positions that leave them vulnerable to an adverse shock has grown significantly in recent years. at an aggregate level, the risk is that a shock to economic conditions could be transmitted to the broader financial system through a weakening in the credit quality of loans to households. this could prompt a tightening of credit conditions and, in turn, set off a mutually reinforcing deterioration of real activity and financial stability. there are welcome signs of moderation in the pace of debt accumulation, but credit continues to grow faster than income. without a significant change in behaviour, the proportion of households that would be susceptible to serious financial stress from negative income or wealth shocks will continue to grow. to better assess the risks associated with growing household indebtedness, the bank regularly undertakes stress tests. in the december financial system review, we conducted a partial stress - testing simulation to estimate the impact on household balance sheets of a hypothetical 3 - percentage - point increase in the unemployment rate. the results suggest that the associated rise in financial stress among households would double the proportion

tend to decline by more than those of short - term bonds. a first look at the stylised facts using the same approach that i outlined earlier confirms this pattern for the euro area. extracting a quantitative easing factor from high - frequency interest rates and other financial market data confirms that news about ecb asset purchases had yield compression and flattening effects on the term structure, as shown in chart 6. chart 6 estimated effect of quantitative easing surprise on the ois curve ( basis points ) sources : based on altavilla et al. ( forthcoming ). notes : surprise impact normalised to 10 basis points for the ten - year maturity. the academic literature distinguishes broadly between two channels through which this policy works : signalling and portfolio rebalancing. under the signalling channel, central bank asset purchases serve as a commitment device to keep policy rates at low levels for an extended period of time. under the portfolio rebalancing channel, the central bank ’ s withdrawal of net bond supply from the market induces investors to reshuffle their portfolios, and these changes in demand - supply constellations affect bond prices and yields. under the signalling channel, the expectations component of bond yields decreases upon news about asset purchases, whereas under the portfolio rebalancing channel, the term premium component is compressed. the expectations and the term premium components cannot be observed separately. econometric modelling is required to discriminate between the two components and provide a deeper understanding of the transmission channels of asset purchases. an important episode studied by ecb researchers is the period before the announcement of the app in january 2015. between summer 2014 and the official announcement, some events reinforced the view of market participants that ecb government bond purchases were likely to start in the near future. the events examined by ecb staff occurred between the governing council meetings on 3 september 2014 and 22 january 2015, the day when the ecb announced the app. cumulating across these events, the long - term bund rate declined by 30 basis points. this is the bar that you see on the left in chart 7. with the help of an econometric term structure model, ecb staff have decomposed that change into the contribution of changes in average short rate expectations and the term premium. [ 21 ] chart 7 shows that it is the term premium that accounts for essentially the entire decline in yields. on the day of the app announcement itself ( 22 january 2015 ), the ten - year bund rate decreased by