Fed: Canada's mortgage market shows resilience amid inflation, high interest rates
Date
5/23/2024 4:26:11 AM
(MENAFN) Fitch Ratings has indicated that Canada's mortgage market continues to exhibit resilience despite the challenges posed by inflation and high interest rates, resulting in increased mortgage payments for approximately half of homeowners. In a statement released on Tuesday, the rating agency emphasized that the ability of Canadians to manage their mortgage debt is closely linked to factors such as employment stability, wage growth, along with personal savings, all of which contribute to supporting the overall performance of mortgages in the country.
According to the Canadian Bankers Association, the overwhelming majority of mortgage borrowers in Canada, exceeding 99 percent, have maintained a satisfactory payment record, with only a small fraction, approximately 0.19 percent, experiencing delinquencies lasting more than 90 days as of February. While acknowledging this strong performance, Fitch noted a slight uptick in delinquencies this year, which it attributed to an increase in unemployment rates.
Looking ahead, Fitch anticipates a modest rise in the unemployment rate in Canada, projecting an increase to 6.4 percent by the end of the year from the current rate of 6.1 percent, before a subsequent decline to 6.1 percent in the following year. Despite this projection, the agency remains cautiously optimistic about the mortgage market's resilience, forecasting delinquency rates to temporarily rise to a range of 0.25 percent to 0.3 percent before gradually falling to a range of 0.2 percent to 0.25 percent by 2025.
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