Canada’s largest commercial-mortgage lenders, including Sun Life Financial Inc. and Royal Bank of Canada, are turning more cautious as the commodities slump stunts economic growth and raises the risk of default.
“We’re concerned about the stage in the real-estate cycle Canada’s in right now -- there’s more risk in the market,” Michael Andrews, managing director of Toronto-based Sun Life’s Canadian commercial-mortgage team, said in an interview at a real estate conference in the city Tuesday. “We wanted to ensure our portfolio could withstand, for example, a 25 percent drop in prices. Do we think that will happen this year? No. But what about in five years? It’s just prudent to test.”