Mortgage rules tightened household lending in Q1: BoC

New mortgage underwriting rules contributed to tighter lending conditions for households in the first quarter of 2018, according to the Bank of Canada’s survey of financial institutions.

The central bank’s quarterly questionnaire of lending conditions had historically focused on business loans but, after a year of collecting data, the results have now been expanded to include household lending as well.

Coincidentally, the first edition of the so-called senior loan officer survey covered the first period that revised standards for residential mortgage underwriting. Financial institutions quizzed for the household portion of the survey reported that the new, “B-20” mortgage standards have had some impact since they came into effect in January, particularly when it comes to “non-price” conditions such as minimum payments and credit limits.

Overall household lending conditions tightened in the first quarter of this year, “driven by mortgagerelated lending,” said the survey, which was released Monday.

“The tightening in mortgage lending was driven by recent changes to underwriting standards (Guideline B-20), which mainly affected non-price conditions for low-ratio mortgages and home equity lines of credit (HELOCs),” added the Bank of Canada.

“Price conditions for mortgages also tightened, as the spreads charged to customers increased in tandem with mortgage rates.”

In this regard, the Bank of Canada’s findings may be a preview of things to come. While the country’s big lenders expect mortgage growth to slow under B-20, they have so far said it is too early to report what the impact has been. For example, Royal Bank of Canada president and chief executive Dave McKay told reporters last week that it was “still early.”