Canada’s banks could find themselves in crisis if a housing market crash was to happen.

A report from investment analysts Morningstar says that the likelihood of higher interest rates, falling prices and a slower market at some time in the next year or so could lead to a high level of defaults. The Royal Bank of Canada and CIBC would be hit the hardest.

Morningstar predict that there will be a correction in the market within the next five years and are suggesting that it could see property values fall by as much as 30 per cent.

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