It’s that time of the week again!
Let’s do our regular end of the week news round-up and open topic discussion thread for the weekend.
Here are a few recent links to kick off the chat:
–Experts perplexed at decline in sales
–Vancouver too tiny to count?
–CTV video on squeezed families
–Downtown Vancouvers Dead Zone
–Toronto condo sales plunge
–Offering 90k over ask on single bid?
–Expanding the seawall past Kits
–tougher credit cheaper houses
So what are you seeing out there? Post your news link, thoughts and anecdotes here and have an excellent weekend!
A new report issued by US ratings agency Fitch says that fast-rising home prices and record levels of household debt pose a threat to the credit portfolios of Canadian banks.
The agency examined the exposure of Canada’s six largest banks to mortgage risk and found that household debt fuelled by mortgage credit expansion in Canada is the largest threat to credit profiles.
“These are quite high levels of debt for households and the movement in house prices, we don’t think this is sustainable in the long term,” said report author Fabrice Toka, senior director at Fitch.
The six banks have a combined $730-billion in mortgage exposure and an additional $182-billion in home equity loan exposure, the report noted.
High unemployment or interest rate shock “could aversely affect the ability of leveraged homeowners to meet their mortgage obligations,” the report said.
The risk testing scenario looked at drops of 1 to 10% and sees CIBC and RBC as the most exposed to mortgage value risks. The debt-to-income ratio in Canada is currently higher than it was in pre-recession US, but Fitch points out that there are structural differences in our housing market.
Here’s the full article in the Financial Post.