Senior Loan Officer Survey—Fourth Quarter of 2018

Results of the Fourth-Quarter Survey | Vol. 11.4 | December 21, 2018

This Senior Loan Officer Survey (SLOS) focused on changes to lending practices in the fourth quarter of 2018. The survey was conducted between October 26 and November 23, 2018.

Household lending conditions

  • Overall household lending conditions (both mortgage and non-mortgage lending) were unchanged this quarter (Chart 1).1
  • Although mortgage lending conditions were unchanged at the national level (Chart 2), both high- and low-ratio mortgages in Quebec experienced some minor easing of non-price conditions. There was also a slight tightening of price conditions for low-ratio mortgages in British Columbia, the Prairies and Ontario.2
  • Approval rates for mortgage lending were lower this quarter, with rising interest rates and stress tests resulting in fewer clients qualifying.
  • Demand decreased for all types of mortgage borrowing, with most institutions citing higher interest rates as the main reason.
  • Although overall non-mortgage lending conditions were unchanged, some slight price easing was reported for other consumer lending (Chart 3).
  • While demand for auto loans was mostly unchanged, demand for other consumer lending fell, with rising interest rates cited as the reason.

Chart 1: Household lending conditions were unchanged in 2018Q4

* 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: Overall mortgage lending conditions were largely unchanged, despite some minor regional movements

* 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: Overall non-mortgage lending conditions were mostly 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

  • More widespread easing of lending conditions continues to be driven by competition for corporate borrowers,3 with the overall balance of opinion reaching -16 per cent this quarter (Chart 4).
  • This easing has been occuring for both price and non-price corporate lending conditions, while lending conditions for small and commercial businesses remain unchanged (Chart 5).
  • Approval rates for corporate borrowers were lower in the fourth quarter of 2018 because some respondents appear to be less willing to undertake deals with looser terms and conditions, such as covenant-lite loans.
  • Demand for credit increased in the fourth quarter from all types of business borrowers. For corporate borrowers, this increase was attributed to firms refinancing or extending loan facilities to obtain better terms and conditions and for general purposes. For small business and commercial borrowers, greater demand occurred mainly in British Columbia and Quebec and was linked to a favourable economy and positive business sentiment.

Chart 4: More widespread easing of lending conditions is driven by competition 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. 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: Price and non-price lending conditions eased for corporates, while they remain unchanged for small and commercial businesses

* 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. Note that 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. Non-price conditions include terms of credit (collateral, covenants, etc.), general standards and capital allocation limits.[]
  3. 3. Corporate, commercial and small business borrowers are differentiated by the size of the loans authorized. See U. Faruqui, P. Gilbert and W. Kei, “The Bank of Canada’s Senior Loan Officer Survey (Box 2)” (Ottawa: Bank of Canada, 2011).[]