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It’s a scary new world out there for those seeking a Mortgage, and The Bank of Canada is doing their best to explain the higher interest rates and increasingly stringent mortgage rules forced upon Canadian home buyers and owners. On Wednesday, they explained how the new conditions have slowed down new households from becoming “deeply indebted borrowers.

The interest rate has already spiked five times since last year in the face of a level of household debt that has become a primary worry for the Bank of Canada.

The central bank has been examining and analyzing how households are managing the elevated borrowing costs as a means to map out future hikes. There has been extra attention to overstretched homeowners.

As a plus, credit growth has leveled out while household vulnerabilities have shown signs of slowing down. The bank has credited the spending adjustments made by Canadians to offset the stricter, more expensive mortgage climate for these improvements, on top of difficult federal mortgage rules.

According to a staff analytical note co-authored by Olga Bilyl and Maria teNyenhus, there are less highly indebted borrowers coupled with slowed mortgage activity due to the more rigid policies when it comes to successfully procuring a mortgage. Plus, expensive interest is drastically bolstering the quality and quantity of credit.

Two years ago, the current mortgage stress tests started being used by lenders and have paid dividends in cutting down on new high-leverage, insure loans to 6%. These are loans that are over 4.5 times an applicant’s annual income. This decrease is significant, particularly when compared to the 20% rate in late 2016.

High-leverage, newer loans have also subsided due to a federal rule change, shrinking loans of this nature to 14% down from 20% in 2017. In fact, the number of new mortgages to highly-indebted borrowers has dropped 39% year-over-year in the second quarter of 2018.

Carolyn Wilkins, the Bank of Canada’s senior deputy governor explained how the debt-to-income ratios of households are still high but showing signs of leveling out and decreasing. Wilkins claims that since it took a long time for the vulnerability to accumulate, it’ll take equally as long to vanish.

The hope of the bank is for continued improvement in loan quality contributing to a steadier, more robust economy, that will be ready for any challenge.