Moody’s Investor Services, a leading credit-rating agency, tells MHProNews  that while the Canadian government has an AAA rating due to its improving finances and its strong regulatory and institutional framework, rising home prices and high consumer debt may pose a risk to the economy.

Steven Hess, Moody’s senior vice-president, says, “This combination presents a potential risk to the banks and to the federal government directly, as it guarantees a considerable portion of mortgages.”

Canada’s housing market is particularly inflated in the metropolitan areas, in some analysts views, and the slowdown in housing construction leads Hess to assert that as interest rates rise from historic lows, both home prices and household debt loads will come under pressure.

Moody’s report from last year, seemingly at odds with this year’s, noted a more stable housing market and less household debt, according to TheGlobeandMail. The current report also cautions that while the country’s slack business capital investment could possibly have a long-term effect, Hess says, “We do not view recent economic developments as structural shifts, and believe that Canada’s long-term growth prospects have not deteriorated.”

Another strong point: The country’s budget is expected to show a surplus in fiscal 2015-2016. ##

(Image credit: wikipedia.org)

(Submitted by Matthew J. Silver to the Daily Business News – MHProNews)