Business lending conditions in Canada are at the tightest level since the start of the Covid-19 crisis, with households also facing even sharper constraints amid higher interest rates.
(Bloomberg) — Business lending conditions in Canada are at the tightest level since the start of the Covid-19 crisis, with households also facing even sharper constraints amid higher interest rates.
The balance of opinion on overall business lending conditions jumped to 11.3 in the first quarter of this year, according to data released Friday in the Bank of Canada’s Senior Loan Officer Survey. That’s the highest since the second quarter of 2020.
The increase from 4.1 at the end of last year suggests more financial institutions view the availability of credit becoming increasingly scarce. In part due to restrictive borrowing costs in Canada and around the world, the data confirm aggressive interest rate hikes among central banks are working to create a tougher borrowing environment — a favorable setting for policymakers seeking to bring inflation to heel.
Still, non-pricing conditions marked the biggest shift, and the survey coincided with global banking concerns that arose at the beginning of March.
The survey also shows a tougher mortgage credit landscape for consumers — the balance of opinion jumped to 35.6, the highest in data to the beginning of 2017.
“Unlike in the US, in Canada it appears to be households rather than businesses that are seeing the more widespread tightening of credit conditions,” Andrew Grantham, an economist with Canadian Imperial Bank of Commerce, wrote in a note to clients.
The Bank of Canada releases the data on a quarterly basis, and doesn’t provide written commentary on the results.
–With assistance from Randy Thanthong-Knight.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.