That’s primarily because of the borrower profile those banks are able to serve, according to Morningstar DBRS senior vice president and sector lead, North American financial institution ratings Carl De Souza (pictured top).
“The way the Big Six have described that is the quality of their borrower base,” De Souza told Canadian Mortgage Professional. “If you look at their mortgage portfolios, they have really strong credit bureau scores. Loan to values [LTVs] are under 55%, which provides a lot of cushion if housing prices were to crash.”
While many major urban housing markets have contracted across the country, with prices and sales both dipping, De Souza said chances of a full-blown implosion look remote for now.
That’s partly because the pace of homebuilding is still mired well below the levels Canada Mortgage and Housing Corporation (CMHC), the national housing agency, says are required to restore affordability in the long-term.
“I always say, ‘What is the reality of housing prices crashing when we have a structural supply issue?’” Gomez said. “Right now, you’ll see that there are markets that are a little more under stress: Toronto and Vancouver.