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

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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.
  • Jon on 2014-12-09 9:40:08 AM

    Is real estate circus coming to the end now? At least we have hockey we can watch.

  • Jon on 2014-12-09 9:40:56 AM

    Is real estate circus coming to the end now? At least we have hockey we can watch.

  • Brian Lambert on 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.

  • Robby Mac on 2014-12-09 5:39:36 PM

    everybody is missing the big picture with what impact these historically low interest rates are having on the economy. Inflation has gone through the roof over the last decade or so and with the low interest rates it's only making it worse. Now, the US government is printing money with reckless abandon and, even by their own admission, do not know the impact it's going to have in the long run. The answer is simple people...we are getting poorer. Unfortunately, we can't just 'let them eat cake', which almost is the attitude of the our government. I love the argument of, look at the markets, they've rebounded and are doing well again, but people we have to look at the reasons for the rebound and it should paint quite a different picture of a strong financial sector.

    SIDE BAR...It's like our health care industry, we are always looking for the next drug to shove in our bodies to fix the symptom, as opposed to looking at what caused the ailment in the first place...and we wonder why we keep getting sicker (it's almost funny how people think now)...this will tie in at the end I promise...

    When we talk about the 'recovery' in the U.S., the financial sector looks like it is moving along nicely after that debacle in 2008, after all they are recording record gains again...BUT AGAIN wake up and smell the coffee, this is only thanks to quantitative easing by the FED (which isn't even a government agency...I know crazy!).

    Well, if markets doing much better, who is getting poorer then, the middle class guy carrying a lunch bucket, who isn't able to keep up with his bills. The only way government can help curb inflation is by raising interest rates which will definitely have a massive negative impact on our economy in the short term, but we need this so, not only the rich people can survive, but everybody can thrive again and the price of living will be sustainable once again.

    It's funny how backwards people think as far as getting their iPhone a little cheaper...lets buy all of our products from a country and pay them with our borrowed money (FIAT printed money) and it's cheaper so we save money on our purchases, right...WRONG!!! The more a country produces, the more money 'generated' in a society, the richer the country. If our governments (US & Canada) realized we should be manufacturing goods to sell to other countries, hence, enriching our countries and increasing the real jobs in our country, the better off we'd be!

    I agree completely with Brian about the stats of "job" increases in the US and Canada...what jobs are these, working in Walmart or a Tim Hortons (nothing against these jobs), but the simple fact is these jobs DO NOT create wealth in a country therefore these jobs need other jobs to support them. Do people not notice when a factory goes out of business in a small community, usually schools, hospitals, stores, all shut down or downsize because the money generated in that community wasn't from a doctor, lawyer, teacher, store employee, etc, etc, etc...but from the person carrying the lunch pail to work in local factory, mine, mill, etc.

    The answer is, we shouldn't be looking for the next symptom relieving drug (told ya I would tie it in), but should be working with companies to bring their products to have them built in Canada and create wealth in our country. Tax the rich and give to the poor doesn't work and it never has and our western society is learning this lesson as we speak! Why not have the rich thrive and create lots of good jobs for people to work and feed their families. The real beauty of our country is we live in a place where you can go start a company and employ people, so nobody should complain someone else is rich and they're not, because there's nobody to blame but yourself.

    If I'm wrong why is China on the verge of becoming the new world super power...answer, because they produce products and sell those products to the U.S./Canada...painfully obvious isn't it!

    There's my two bits...Done, I'm out!

  • Ron Butler on 2014-12-10 11:29:34 AM

    " inflation has gone through the roof over the last decade or so" in what country has this massive inflation taken place? Paraguay? Tanzania? Certainly not in Canada, USA, Japan or Europe.

  • Jane on 2014-12-10 1:52:18 PM

    I think we should all look at Tar Sands as a way of prosperity. LOL or better yet COL!

  • Robby Mac on 2014-12-10 2:25:00 PM, you're saying your dollar goes as far today as it did a decade ago??? Wow, we must be paying for stuff in different currencies??? My dollar doesn't really buy anything anymore. Actually, to prove my point even further, the government phased out the penny "due to the rising cost of production relative to its face value...". Isn't that funny, they phased out the penny because of its insignificance due to increase cost of everything. How much has your house gone up, how much is it to go out for dinner at a restaurant now, etc, etc, etc,...has income stayed in line with these increases, the answer is not even close...hence, inflation, no?

    Invest in commodities because there has to be some big changes coming soon. Food producers, bouillon (Gold/Silver), anything that's a necessity during a downturn in an economy...we think 2008 was bad, wait until what's coming!

  • Ron Butler on 2014-12-10 3:24:23 PM

    Robby, if we believe that somehow the BOC's published inflation rate is understated by double or triple: it's not 2% its really 6% but the BOC is fooling us somehow then you just have to get on board with the Apollo lunar landings all faked in a studio concept. I paid $2900.00 for a 44 inch Sony Box TV back in the early 90s now a 50 inch flat screen is $699.00. Not exactly inflation.

  • Andy MacDonald on 2014-12-10 4:22:15 PM

    Ron, I think you have been drinking the Koolaid that western governments have been serving up.

    The CPI is definitely managed by the government of the day. By adding or deleting items from the basket of goods it is easy to manipulate data. Keep in mind that they never work backwards and offer revised CPI rates for past periods based on the new basket of goods.

    Here is just one article you may want to read:

    Or this one:

    Numbers can be massaged to make them say whatever you want them to say. Just ask the Fiberal Government in Ontario.

  • Ron Butler on 2014-12-10 4:28:23 PM

    There are a bunch of you grassy knoll guys.

  • Andy MacDonald on 2014-12-10 4:31:16 PM

    We're selling membership cards if you want one...

  • Ron Butler on 2014-12-10 4:33:06 PM

    Is there a bell, a book and a candle at the initiation ceremony?

  • Robby Mac on 2014-12-10 7:51:41 PM

    Ron, so, what you're trying to get me to believe is wages have increased sufficiently in relation to the increase of goods and services over the past two decades? Are you basing inflation on what you purchase a few goods for (such as your TV) and believing your dollar is stretched further today than 20 years ago?

    Question for you, do you not think the U.S. dollar is devalued the more they print? Or, does it have no bearing on its purchasing power?

    To break this down as simple as can be...if a tiny country with a few trees had 10 peaches and 10 dollars each peach would be worth $1, but if the supply of peaches has gone down to 5 peaches each dollar is worth 50 cents and now throw in the situation (as in the current U.S. government) where that government running that country is printing twice as much money, that dollar now has 25 cents of purchasing power, meaning it's going to take you 4 dollars to purchase 1 peach.

    The U.S. government's answer to the problem in 2008 was print money to inflate and stabilize the markets to allow people to think all was good...but there is a cause and effect here.

    Don't know why you think how the U.S. government can continue to print FIAT money and it will have no effect on anything...and I'm the "grassy knoll guy". That's just plain ironic, isn't it!

  • Ron Butler on 2014-12-11 10:34:01 AM

    Lordy .......... trees.......... peaches............. FIAT money (same as Volkswagen money I guess)

    Once the snow started to fall I thought the squirrels would have already stored all the nuts but they clearly missed one.

  • Robby Mac on 2014-12-11 1:04:54 PM

    ...look it up, FIAT currency, it's a real thing, I know crazy stuff.

    I love how you go around my question about money printing and the repercussions because you don't know how to answer it, just like the people running the show down south...but I'm the nut, you got it. I pose a very simple question, but your response is, "I'm a nut", with no rebuttal...enjoy the Koolaid, it seems like you can't get enough!

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