Are other banking giants set to adjust their own lending criteria for tariff-impacted borrowers?
Bank of Montreal (BMO) told mortgage brokers last week it was adjusting some of its mortgage lending rules for certain borrowers in tariff-impacted industries – and while the lender is the first of Canada’s banking giants to publicly make the step, it’s unlikely to be the last to do so.
Other top financial institutions may have even already quietly changed their own guidelines amid escalating unease about the prospect of a damaging US-Canada trade war, according to Mortgage Outlet chief operating officer Leah Zlatkin (pictured top).
“My first thought is that there might be other lenders already doing this, but BMO is certainly the loudest,” she told Canadian Mortgage Professional. “Other lenders may not be advertising this, but they might be doing this on the backend. You might see less of an appetite in certain industries.”
A BMO memo to brokers using its BrokerEdge channel last week said the bank was adding the steel and aluminum sectors to its list of industries with the highest risk profile, adjusting the total debt service ratio for self-employed borrowers in those fields to 42% (from an initial 44%).
The bank said it had taken that decision as a result of US president Donald Trump’s move to slap 25% tariffs on all steel and aluminum imports, including from Canada, on March 12, and what it described as the “turbulent” current economic climate.
“BMO BrokerEdge has reviewed its risk appetite for tariff-impacted industries,” the memo said. “As a result, we have revised our temporary lending criteria for self-employed borrowers.”
Lender caution continues to dominate in uncertain environment
At time of writing, neither Scotiabank nor TD – both of which operate in the mortgage broker channel – had responded to a CMP request to confirm whether they had adjusted, or intended to adjust, their own lending criteria for borrowers in tariff-impacted industries as a result of the trade chaos.
But Zlatkin said BMO’s move could also reflect its controlled caution in the current market, particularly in a broker space where it’s been steadily growing since returning to the channel in 2023.
Five years after COVID-19, Canada faces a new crisis: a trade war with the US. Victor Tran from RATESDOTCA highlights the impact on the housing market, with tariffs and economic uncertainty dampening buyer confidence.https://t.co/2cPmauNHvO
— Canadian Mortgage Professional Magazine (@CMPmagazine) March 19, 2025
“BMO came into our market in a very controlled, small study. They came in deliberately and they came in to get a very small portion of the market,” she said. “This could simply be their way to curtail their appetite. It could simply be [that] they’re looking to be more conservative in terms of where they’re lending.
“They’re still not onboarding every broker in the country so they’re being very selective about who they’re working with, and this might just be about what their appetite is.”
Bank says adjusting lending tolerance is nothing new
A BMO spokesperson told Reuters last week that it had made the move to protect customers’ long-term financial health, said it would not impact workers, and highlighted that lending tolerance adjustments are standard procedure during times of macroeconomic flux.
Still, it faced criticism from the federal Conservative Party’s shadow minister for Labour Kyle Seeback, who said in a statement that the decision was “making loans for workers and employers harder to come by at a time when Canadian workers are exposed to huge risk as a result of Donald Trump’s unjustified tariffs.”
That’s not to say BMO is taking a hit in the eyes of brokers. “The reality is that for the last month or so, they’ve been the number-one place to send deals because their pricing was good. They do a lot of stuff that other people can’t necessarily do,” Zlatkin said. “Maybe this is just their way to curb appetite.
“The reality is, they still have a lot of cool, niche products, specifically rental market. The files aren’t going to stop, it just may curtail that a bit.”
David Larock, a Toronto broker-owner with Integrated Mortgage Planners, told Reuters he viewed the change as a minor one that was likely to be followed by similar moves among other lenders.
Other sectors included in the bank’s list of so-called “limited appetite industries” are transportation, construction and utilities.
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