What does this mean for Canada’s credit ratings?
- by admin
A new report from credit rating agency Standard & Poor’s has found that Canadian mortgage rates are likely to stay at their current levels for a little while longer.
“The recent housing boom in the United States is likely to accelerate, and the housing market is likely still to experience a sharp rise in housing-related delinquencies,” the agency wrote in a report released Tuesday.
“While this is not unexpected, it will result in a sharp increase in the number of credit ratings for Canadian mortgage borrowers and lenders, which could further limit the ability of Canadian households to make good on their mortgage obligations.”
While the report does not specify what the ratings would look like for a country with an active housing market, the findings suggest a longer-term negative outlook for Canada.
“With a high housing price index and lower mortgage interest rates, a growing number of borrowers are likely making mortgage payments at rates well above the market, thereby putting upward pressure on interest rates,” S&P wrote.
The agency warned that Canada’s long-term credit outlook remains “vulnerable to adverse shocks, and that the current environment will be a risk for the sustainability of Canada’s financial system.”
Canada’s credit rating will be upgraded to stable from junk in the next three years, meaning that it will be subject to a range of restrictions, such as higher fees, interest rate increases and mortgage defaults.
The downgrade could have implications for the Canadian housing market and its credit rating, including for the government’s ability to meet its budget obligations.
For more from The Lad, visit thestar.ca
A new report from credit rating agency Standard & Poor’s has found that Canadian mortgage rates are likely to stay…
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