Fitch says Canadian housing could weaken in the medium-term

Fitch is out with an assessment of Canadian banks today but says the financial sector could withstand a moderate-to-severe downturn.

“Fitch generally believes that Canadian home prices are likely nearing a plateau and could exhibit some weakness over a medium-term time horizon,” the rating service says in an assessment issued Tuesday. “We believe a sharper than expected correction would flow through to higher (risk-weighted asset) levels, thereby putting further pressure on regulatory capital ratios at a time when rising credit losses will likely hurt retained earnings.”

I don’t even know why I’m reporting on this. If there’s are two areas where the ratings agencies have absolutely zero credibility they’re housing and the financial sector.