If the Canadian dollar is lent at zero interest then it is worth nothing. You'll need a helluva lot more of it than $200k to buy a house
Please pay attention, SOME loans can be had at 0% interest. First you have to start out with a money supply that is paying 0% interest on the money they print. Only the Gov can do that because it is a non-profit institution.
These are the loans that can be had at 0%, personal loans that is used for personal items that do not generate income. A house, a car, furniture, a vacation are all items that generate no income for you.
A 200k house @1.0% interest would cost you about 920/mo for 20 yrs=200K
A 200K house @ 11% interest would cost you about 2050/mo =492K
Why should the builders get a 3% profit on a house after all their expenses are paid (including their own journeymen wages) and a banks makes 290K over 20 years for entering a few numbers into a spreadsheet that was paid for a long time ago?
If the builder took out a loan to build the house then he would have paid interest on that loan which would have been added to the price of the house.
BTW that 292K difference is money in your pocket over the 20 years which works out to about 1,000/mo.
The banks (all corporations) wouldn't go bust but their wages (and all of the others who make 500x more than 'normal') would drop to whatever the standard would be)