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“Given this, we expect more evidence of fraud” in Canadian residential mortgages could arise, S&P said. The rating company pointed to a January report from Equifax Canada whose data suggested a 52 per cent rise in suspected fraudulent mortgage applications since 2013.

Home Capital Group Inc. saw retail investors rush to pull their deposits last year after a regulator said former executives at the mortgage lender failed to properly disclose that brokers had been falsifying mortgage applications. Laurentian Bank of Canada said in December that it found customer misrepresentations on some mortgage loans it sold to another firm.

S&P did not change its A- credit profile for the Canadian banks, or any individual bank ratings or outlooks. The change increases the risk weights it applies to calculate risk-adjusted capital ratios that determine credit ratings, and is expected to result in the ratios declining by less than 50 basis points for the majority of the big six banks.

Bloomberg.com