S&P may not be as bullish on the Canadian housing market as brokers, adjusting the rating for Genworth Canada to “stable” from “positive," citing concerns about consumer debt loads, among others.
“Macroeconomic considerations weighed heavily in our decision to revise the Outlook,” writes Standard and Poors, in its review of the default insurer’s rating this week. ”Canadian GDP is settling into a slower growth pattern, with personal income growth slowing and slack labour demand keeping Canada's unemployment rate above pre-recession lows.
“Slowing income growth may alter consumer spending patterns and result in a pull-back in demand for credit.”
Analysts have a similar take on the Canadian economy, using it to downgrade origination expectations across the broker channel.
That jives with the observations of brokers in some of Canada’s smaller markets, already grappling with a slowdown in new mortgage deals.
Still, S&P’s rating decision aside, industry veterans continue to argue that Genworth will ultimately benefit from any CMHC retrenchment – something brokers have already begun to make note of.
In fact, Genworth may be counting on CMHC’s move to limit lender access to portfolio insurance as a way of growing its book this year.
“There is plenty of runway." said Genworth CEO Brian Hurley earlier this year, pointing to the insurer's willingness and, indeed, its ability to write new business.
Genworth, including Canada Guaranty, taps into another government-backed fund capped at $250 billion – and not the CMHC’s $600 billion pool, now nearing its lending limit.