Fitch warns of “unsustainable” levels of household debt including mortgages

Fitch warns of “unsustainable” levels of household debt including mortgages

Fitch warns of “unsustainable” levels of household debt including mortgages Credit rating agency Fitch has warned that Canada’s banks are at risk due to “unsustainable” levels of consumer debt. Although the firm says that the banks have good earnings and balance sheets it’s outlook for next year comes with caution due to the expected rise in interest rates and the effect that will have on consumers’ ability to service debts although banks will be largely protected from defaults on home loans due to CMHC cover. Fitch says that there is overvaluation in housing in Vancouver and Greater Toronto in particular and this sentiment was shared in a report by Moody’s. Fitch also issued warnings about the housing market back in June saying that it estimated a 20 per cent overvaluation.
15 Comments
  • Jon 2014-12-09 9:40:08 AM
    Is real estate circus coming to the end now? At least we have hockey we can watch.
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  • Jon 2014-12-09 9:40:56 AM
    Is real estate circus coming to the end now? At least we have hockey we can watch.
    Post a reply
  • Brian Lambert 2014-12-09 11:38:57 AM
    The great interest rate scare? You can find articles from organizations and analysis on a daily basis discussing the Interest Rate Debate. You can find just as many reports on rates rising as you can at rates staying low for a long time. BOC Gov. Stephen Poloz stated that even if the US does raise rate's, not necessarily will Canada raise rates, it will fully depend on the Canadian economy. Look at the world today. Europe GDP falling and showing early signs of recession. Russia start of recession. Our biggest trading partner the US, is it really expanding? You hear of headline news reports of labor market improvement but then again it is low paying jobs. Oil is falling rapidly which is good for consumers, business, airlines, transportation, but it is not good for the North American oil producers especially here in Canada. At $65 producers will struggle at profitability, considering Canada Oil & Gas percentage of GDP is 10-12% and Alberta GDP is 22%. This all could influence the recovery started six years ago. Personally, I believe interest rates will continue to stay low for the foreseeable future. There is just to much turmoil in the world today for any quick recovery.
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