BMO Tightens Lending Criteria for Tariff-Impacted Borrowers
The Bank of Montreal (TSX: BMO) has announced significant restrictions to its lending policies for borrowers in tariff-impacted industries following recent Canada-US trade tensions.
The banking giant has expanded its “Limited Appetite” category to include the steel and aluminum industry, joining sectors already under heightened scrutiny such as construction, transportation, retail, and manufacturing.
BMO’s decision to reduce the Total Debt Service (TDS) ratio from 44% to 42% for borrowers in these industries makes qualifying for loans significantly harder. The bank also implemented a new Gross Debt Service (GDS) maximum of 39%. These stricter ratios measure borrowers’ debt obligations against their income and directly limit the maximum loan amounts available to applicants.
Further tightening access to credit, the bank now requires at least one borrower to have a minimum credit score of 750, a threshold significantly above the typical Canadian average.
The policy changes took effect on March 19th and are being attributed to “newly announced tariffs between Canada and the United States” and the “turbulent economic landscape.”
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