Moody's downgrades six of Canada's major banks TORONTO Moody's Investors Service downgraded six of Canada's major financial institutions on Monday on concerns over high levels of consumer debt among Canadians and elevated house prices. The ratings affect Toronto-Dominion Bank, Scotiabank, Bank of Montreal, Canadian Imperial Bank of Commerce, National Bank and the Desjardins caisse populaire. Moody's vice president David Beattie noted Monday that the banks still rank among the highest-rated banks in the world. TD is the highest rated at AA1 among the six (down from AAA). Bank of Nova Scotia and Desjardins drop to AA2 (from AA1), CIBC, BMo and National slip to AA3 (from AA2). Canada's commodity-rich economy has fared better than other nations, and its banks have long been rated among the soundest in the world. There was no mortgage meltdown or subprime lending crisis. But there are fears of a housing bubble fueled by historic low interest rates. Beattie noted Canadian household debt to personal disposable income reached a record 165 percent, up from 137 percent as of 30 June 2007. He also said home prices have also increased by about 20 percent since November 2007. "The Canadian consumer is leveraged almost to the extent that the U.S. consumer was ahead of the housing crash down there some years ago," Beattie said. Canadian Finance Minister Jim Flaherty responded with a statement saying the financial sector is "sound and well regulated" by the federal government. Our government has taken aggressive and proactive actions since 2008 to protect the Canadian housing market and curb personal debt. We will continue to monitor the housing market to ensure its long-term stability," Flaherty said in statement. The government clamped down on mortgage rules last year in response to concerns over household debt and a hot housing market. The government cut the maximum term of government insured mortgages to 25 years from 30 years. It is also dropped the limit that Canadians can borrow against their home equity. Flaherty reiterated Monday that the World Economic Forum has ranked Canada's banking system as the sounded in the world for five years in a row. He also noted that Moody's rating off Canadians banks continues to be among the highest in the world. Opposition New Democrat lawmaker Peggy Nash accused the government of relying on "consumer debt" to prop up Canada's economy. Royal Bank, Canada's largest bank, wasn't on the list because its long-term deposit rating had already been dropped to Aa3 from Aa1 in June as part of a move to cut the credit ratings of 15 of the world's largest banks.