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.