Canada’s Bank of Montreal (BMO) has adjusted mortgage terms for steel and aluminum industry workers, citing economic uncertainties fueled by U.S. tariffs. The bank reduced the maximum total debt service ratio (TDSR) for borrowers in these sectors from 44% to 42%, limiting their borrowing capacity and adding steel and aluminum to its list of higher-risk industries.
Key Changes:
TDSR Reduction: Borrowers’ monthly debt obligations, including housing costs, must now not exceed 42% of income, down from 44%.
Risk Classification: Steel and aluminum join utilities, construction, and transportation as “limited appetite industries” with stricter lending criteria.
Trade War Context:
Canada imposed 25% retaliatory tariffs on U.S. goods, including steel and aluminum, after President Donald Trump’s levies on Canadian metals.
Industry leaders warn the tariffs threaten jobs and have called for government support.
Bank’s Rationale:
BMO stated the changes aim to protect borrowers’ long-term financial health amid economic turbulence, emphasizing that the adjustments are part of routine policy reviews.
Industry Reaction:
David Larock (Mortgage Broker): Described the changes as minor and predicted other lenders would follow suit.