Toronto | 7-Oct-2025, 14:00 IST — Filed via Mortgage Professional Australia

The continuing U.S.–Canada tariff dispute is no longer just a trade headline — it is starting to shape how Canadian lenders evaluate mortgage applicants. Industry professionals caution that the uncertainty around steel, aluminum, and other tariff-affected industries has already influenced credit policy at some banks.

Trade Dispute Meets Mortgage Desks

Canadian borrowers tied to sectors directly hit by tariffs — such as steel, aluminum, and auto parts — are facing closer scrutiny when applying for loans.
Lenders have been adjusting their underwriting standards, with some banks lowering the maximum debt-service ratios allowed for business owners in these industries.
The move reflects a broader caution: if tariffs bite into profits and wages, mortgage defaults could rise in affected sectors.

Industry Voices Stress “Client Support”

Mortgage brokers interviewed emphasized that the key challenge is confidence. Even qualified borrowers are feeling anxious about affordability in an unpredictable trade environment.
In response, many mortgage professionals are doubling down on client communication — offering scenario planning, refinancing guidance, and fixed-rate advice.
As one broker put it: “Our role right now is half financial adviser, half counselor — keeping clients calm while ensuring their loans are structured to withstand shocks.”

Borrower Impact Scenarios

Borrower Type	Risk Adjustment	Mortgage Impact
Steel/Aluminum business owner	Lower allowable TDSR (42% vs 44%)	Reduced borrowing power, possible re-structuring
Employee in tariff-affected factory	Higher income stability checks	Slower approvals, preference for fixed products
General borrower (non-affected sector)	Largely unchanged	Still benefits from BoC’s recent rate cuts

Bigger Picture: Mortgage Market Resilience

Despite sector-specific caution, the overall Canadian mortgage market remains resilient:

The Bank of Canada’s September rate cut to 2.50% is easing costs for variable-rate borrowers.
Refinancing activity is ticking higher, as homeowners look to lock in lower payments.
Brokers report steady interest from first-time buyers in suburban markets, partly offsetting weakness in industrial towns hit by tariffs.

What to Watch

Trade talks outcome: Any breakthrough in tariff negotiations could reverse lender caution.
Employment data: If layoffs rise in export-heavy industries, mortgage arrears risk could climb.
BoC guidance: Central bank commentary on trade-driven inflation or GDP shocks will be crucial for rate expectations.

Why It Matters

For Canadian borrowers, the trade war highlights how global politics can shape local mortgage approvals. Even if household income hasn’t changed, sectoral risk assessments mean some applications face tighter conditions. For the mortgage industry, it’s a reminder that client trust — built through education and proactive advice — is as important as rate shopping.

The tariffs may come and go, but for lenders and borrowers, the lesson is clear: uncertainty demands preparation.