BMO changes some mortgage rules for steel, aluminum business owners due to trade war

Canada’s Bank of Montreal has changed some terms of its mortgage process for steel and aluminum business owners, a memo sent to its brokers shows, as US tariffs stoke uncertainties in the industry.

The lender said in the memo this week that borrowers’ total debt service ratio – the percentage of monthly household income that covers housing costs and other debts – will be reduced to 42% from 44%, meaning the borrower will have more room to manage their housing budget and a smaller mortgage.

BMO also added the steel and aluminum sector to its list of industries that are more prone to risk.

“With newly announced tariffs between Canada and the United States, and consideration to the turbulent economic landscape, BMO BrokerEdge has reviewed its risk appetite for tariff-impacted industries,” the memo said.

“As a result, we have revised our temporary lending criteria for self-employed borrowers.”

Canada, the biggest foreign supplier of steel and aluminum to the United States, announced this month 25% retaliatory tariffs on goods including steel, aluminum, computers, sports equipment and other products in response to US President Donald Trump’s tariffs on Canadian-made steel and aluminum.

Steel manufacturers in Canada have said that the tariffs will cause grave concern for Canadian steel workers and have asked the government to support the industry.

A spokesperson for BMO said the measures would not impact workers and were meant to protect customers’ long-term financial health.

Policy adjustments are normal course procedure that reflect multiple inputs including the macroeconomic environment, the lender said.

The list, called limited appetite industries, also includes utilities, construction, and transportation as areas where the lender has a slightly reduced tolerance.

BMO is the first bank in Canada to take such an action in response to the trade war.

Toronto-based mortgage broker and owner at Integrated Mortgage Planners, David Larock, said the change was minor and expects other lenders to make similar adjustments.

(By Nivedita Balu; Editing by Caroline Stauffer and Nia Williams)

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