Scenario playbook for MCAP
MCAP’s brief lays out a base case of 'higher for longer' rates with stabilizing prices only after further nominal and real declines, a downside of oil‑driven BoC hikes and faster credit stress, and a low‑probability upside where disinflation allows cuts late‑2026. The recommended actions include monthly stress test updates, targeted monitoring of high‑LTV cohorts, and cautious AI pilots with strong governance. (financialpost.com) (westernstandard.news)
Bank of Canada held its policy rate at 2.25% on March 18, 2026 and explicitly flagged elevated energy‑price volatility from the Middle East as a source of upside inflation risk. (bankofcanada.ca) Brent crude spiked above US$100 during mid‑March and briefly topped US$119 per barrel on March 19 as attacks and supply disruptions in the Strait of Hormuz removed an estimated ~10 million barrels per day from global flows, according to the IEA and market reports. (iea.org) Canadian MLS® home sales fell 1.3% month‑over‑month in February 2026 and were 8.1% below February 2025, while CREA‑reported national average sale prices were about $663,828 in February, underscoring the patchy demand backdrop MCAP’s playbook targets. (crea.ca) Teranet‑National Bank house‑price indices show year‑over‑year weakness entering 2026 (HPI still several percent below its 2024 peak), adding empirical basis for modelling further nominal and real declines before price stabilisation. (globalpropertyguide.com) Bank of Canada analytical data indicate roughly 70% of outstanding mortgages had current LTVs ≤65% as of Sept. 2024, even as CMHC and private analytics flag a renewal wave of roughly 1.5–1.8 million mortgages through 2026 that concentrates stress in high‑LTV and high‑debt pockets. (bankofcanada.ca) Official and industry data show mortgage arrears and severe delinquencies have risen from post‑pandemic lows—Toronto and parts of Ontario report the sharpest jumps—supporting MCAP’s recommendation to monitor high‑LTV cohorts and update scenario runs with monthly cadence. (mpamag.com) OSFI finalised an expanded Guideline E‑23 on model risk management in September 2025 that explicitly covers AI/ML and takes effect May 1, 2027, which underpins MCAP’s call for cautious AI pilots with strong governance and documented model‑risk controls. (regulations.ai) MCAP’s institutional scale—public filings and corporate materials cite roughly $150B in assets under management and a servicing footprint covering ~400,000 homeowners—gives it the operational capacity to run monthly stress updates and targeted cohort surveillance if senior governance mandates are implemented. (mcap.com)
