(Toronto) Canada’s banking regulator is bracing for housing market weakness to potentially last through 2023 as it sees the sector as a growing source of concern.

In its latest annual risk report, the Office of the Superintendent of Financial Institutions (OSFI) indicates, without forecasting, that the housing market is its main source of concern, since higher high rates translate into higher probabilities larger failures.

Superintendent Peter Routledge, however, says that so far credit quality still looks quite strong and residential real estate remains healthy as the economy as a whole shows resilience and the unemployment rate remains low.

According to Routledge, the effects of high interest rates on credit quality have so far been much milder than observers might have predicted, but the risks still exist.

He adds that to better prepare for future risks, OSFI is revising the mortgage underwriting rules of its B-20 guideline and taking a closer look at how banks handle variable rate and fixed rate mortgages. fixed reimbursement.

Other areas of concern identified by the regulator include liquidity and funding risk, commercial real estate weakness, private credit contagion risk, digital innovation risk, climate risks, cyber risk and third-party risk for banks that use systems like cloud computing.