Fitch forecasts slow mortgage growth

Amid high housing prices and tougher mortgage rules, Fitch Ratings is forecasting tepid mortgage growth in Canada over the next couple of years.

In a new report, the rating agency said that it is expecting Canadian house prices to remain relatively flat for the next two years.

It predicted that nominal prices will rise by about 1% over the coming couple of years, and that real prices will fall.

“Stretched affordability and [macro-prudential] measures limiting the number of borrowers able to qualify for home loans will limit home price growth,” Fitch said in the report.

Fitch also noted that government involvement in the Canadian mortgage markets is expected to decline, “which will make some home loans modestly more expensive.”

The rating agency forecasted 1% mortgage growth for Canada in 2020 and 2021.

Fitch said that mortgage performance is expected to remain stable in 2020, “supported by strong employment, projected income growth and low interest rates.”

Additionally, Fitch said that Toronto and Vancouver “remain the most overvalued cities with home prices vulnerable to shocks.”

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.