Senior Loan Officer Survey—Third Quarter of 2019

Results of the Third-Quarter Survey | Vol. 12.3 | October 22, 2019

This Senior Loan Officer Survey (SLOS) focused on changes to lending practices in the third quarter of 2019. The survey was conducted between August 9 and September 6, 2019.

Household lending conditions

  • Mortgage lending conditions continued to ease in the third quarter of 2019, while non-mortgage lending conditions tightened (Chart 1).1, 2
  • Easing in mortgage lending conditions took the form of price easing,3 as competition drove lenders to pass on more of their decreased funding costs to customers. Non-price conditions were unchanged (Chart 2).
  • High-ratio mortgage lending conditions are expected to ease next quarter, reflecting the Canada Mortgage and Housing Corporation’s (CMHC) First-Time Home Buyer Incentive. Lending conditions for low-ratio mortgages and home equity lines of credit are expected to remain unchanged.
  • Lower interest rates drove an increased demand for mortgage loans. Demand is expected to increase next quarter for mortgage lending because of strong fundamentals as well as CMHC’s First-Time Home Buyer Incentive.
  • Price conditions tightened, while non-price lending conditions were mostly unchanged for non-mortgage lending (Chart 3). Tighter conditions for auto loans occurred across all regions. But tighter conditions for other consumer lending were limited to Quebec—due to the province’s new requirement that banks charge borrowers at least 2 percent of their outstanding credit card balance as part of the minimum payment.
  • Non-mortgage demand increased in the third quarter of 2019, driven by other consumer lending.

Chart 1: Mortgage lending conditions eased, while non-mortgage lending conditions tightened

* 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: Competition drove the easing in mortgage price conditions

* 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: Price conditions tightened for non-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.

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

Business lending conditions

  • Overall business lending conditions were unchanged in this quarter (Chart 4), with a slight tightening in non-price conditions and unchanged price conditions (Chart 5).
  • For corporate borrowers, a slight easing in price conditions was offset by a tightening in non-price conditions for firms in the energy sector. This ends the extended period of overall corporate easing that began in the fourth quarter of 2017 and peaked in the fourth quarter of 2018.4
  • Concerns about the economic outlook and energy sector in the Prairies continued to result in a tightening of both price and non-price lending conditions for small and commercial borrowers in that region. Outside the Prairies, lending conditions were unchanged apart from some price easing for commercial borrowers.
  • Overall, demand was unchanged for all business borrowers.
  • Access to capital markets decreased for all risk grades of corporate borrower, particularly non-investment grade. Several respondents mentioned that firms in the energy sector had less access to capital markets.

Chart 4: Overall business 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. 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: Non-price lending conditions tightened slightly, while price 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 the small business, commercial and corporate sectors. Last observation:


  1. 1. The survey separates household lending into five categories: high-ratio mortgages, low-ratio mortgages, home equity lines of credit, auto loans and all other consumer lending (i.e., all lending not included in the previous four categories).[]
  2. 2. 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.[]
  3. 3. 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.[]
  4. 4. Corporate, commercial and small business borrowers are differentiated by the size of the loans authorized. See Box 2 in U. Faruqui, P. Gilbert and W. Kei, “The Bank of Canada’s Senior Loan Officer Survey” (Ottawa: Bank of Canada, 2011).[]