Senior Loan Officer Survey—Second Quarter of 2018

Results of the Second-Quarter Survey | Vol. 11.2 | June 29, 2018

This Senior Loan Officer Survey (SLOS) focused on changes to lending practices in the second quarter of 2018. The survey was conducted between May 7 and June 1, 2018.

Household lending conditions

  • Overall household lending conditions eased somewhat, driven by mortgage lending (Chart 1).1
  • Mortgage approval rates continued to decline as a result of recent changes to underwriting standards (Guideline B-20) affecting low-ratio mortgages and regulations implemented near the end of 2016 affecting high-ratio mortgages. To compete for the remaining pool of qualifying borrowers, lenders eased price conditions2 for both high- and low-ratio mortgages (Chart 2). Non-price lending conditions, however, were unchanged. Mortgage lending conditions are expected to tighten in the third quarter of 2018.
  • The recent changes to mortgage rules coupled with rising interest rates have resulted in lower demand for all types of mortgage-related borrowing. This trend is expected to continue in the next quarter.
  • In terms of non-mortgage lending, some easing of price conditions occurred for auto lending, while non-price conditions remained unchanged. Both price and non-price conditions were unchanged for all other consumer lending (Chart 3).
  • Demand for non-mortgage borrowing remained unchanged.

Chart 1: Household lending conditions eased, driven by mortgage lending

* The balance of opinion is calculated as the weighted percentage of surveyed financial institutions reporting tightened credit conditions minus the weighted percentage reporting eased credit conditions. Thus, a positive balance of opinion implies a net tightening.

Note: Each series shows the average of the balances of opinion for the price and non-price dimensions of lending conditions for each category of lending. Last observation:

Chart 2: Price conditions eased for mortgage lending because of competition

* The balance of opinion is calculated as the weighted percentage of surveyed financial institutions reporting tightened credit conditions minus the weighted percentage reporting eased credit conditions.

Note: Each series is the simple average of the balances of opinion for high-ratio mortgages, low-ratio mortgages and home equity lines of credit. Last observation:

Chart 3: Besides some easing in price conditions for auto loans, non-mortgage lending conditions were unchanged

* The balance of opinion is calculated as the weighted percentage of surveyed financial institutions reporting tightened credit conditions minus the weighted percentage reporting eased credit conditions.

Note: Each series is the simple average of the balances of opinion for auto loans and other consumer lending. Last observation:

Business lending conditions

  • Survey results suggest that overall business lending conditions eased again slightly in the second quarter of 2018 (Chart 4), driven by both price and non-price conditions (Chart 5). Once again, the easing was directed at corporate borrowers.3 Lending conditions for small business and commercial borrowers have remained unchanged since the fourth quarter of 2016 and the second quarter of 2017, respectively.
  • Respondents remarked that competition both among banks and with capital markets was the main reason for the easing conditions for corporate borrowers.
  • Demand for credit increased, driven by corporate and small business borrowers. Regionally, improved business sentiment contributed to increased demand from small businesses across all regions and commercial borrowers in British Columbia and the Prairies.
  • Access to capital markets was unchanged for all risk grades of corporate borrowers.

Chart 4: Overall business lending conditions eased in 2018Q2

* The balance of opinion is calculated as the weighted percentage of surveyed financial institutions reporting tightened credit conditions minus the weighted percentage reporting eased credit conditions. Thus, a positive balance of opinion implies a net tightening.

Note: The chart shows the average of the balances of opinion for the price and non-price dimensions of lending conditions. Last observation:

Chart 5: The easing was driven by both price and non-price lending conditions for corporate borrowers

* The balance of opinion is calculated as the weighted percentage of surveyed financial institutions reporting tightened credit conditions minus the weighted percentage reporting eased credit conditions.

Note: Each series is the simple average of the balances of opinion for the small business, commercial and corporate sectors. Last observation:


  1. 1. The balance of opinion suggests only the direction of the net change in lending conditions; it does not provide information on the magnitude of the change.[]
  2. 2. The pricing of credit is defined as spreads over base rates, rather than as the level of rates.[]
  3. 3. Corporate, commercial and small business borrowers are differentiated by the size of the loans authorized. See Box 2 in the backgrounder “The Bank of Canada’s Senior Loan Officer Survey.”[]