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Financial Conditions

About

These data provide additional perspectives on trends and developments in Canadian credit markets.

Financial Conditions Index

The Financial Conditions Index is a weighted average of financial variables. Learn more.

Housing Affordability Index

The Bank of Canada Housing Affordability index was designed to provide a timely measure of mortgage servicing costs for current housing purchases as an aid in the short-run forecasting of residential investment. The index is meant to represent the proportion of the average personal disposable income per worker that goes towards mortgage payments on a quarterly basis based on current house prices and mortgage rates. Learn more.

* The value for the second quarter of 2009 is an estimate. This index captures mortgage payments on a typical house purchase as a ratio of average disposable income and does not include property taxes, insurance and utility costs. A decline in the ratio indicates an improvement in affordability.

SLOS Business-Lending Conditions and BOS Availability of Credit

This graph shows the results of two survey questions: the Senior Loan Officer Survey (SLOS), which collects information on the business-lending practices of Canadian financial institutions, and the Business Outlook Survey (BOS), which gathers the perspectives of senior management at firms whose businesses reflect the composition of Canada's gross domestic product.

The SLOS "business-lending conditions" indicator shows the difference between the weighted percentage of financial institutions reporting tighter credit conditions and the weighted percentage reporting easier credit conditions in the preceding 3 months. The BOS "availability of credit" indicator shows the percentage of firms reporting tighter minus the percentage reporting easier terms and conditions for obtaining financing compared with the previous 3 months.

Thus, for both measures, a positive balance of opinion implies a net tightening in credit conditions.

* The SLOS series starts in 1999 Q2; the BOS series in 2001 Q4. Positive values indicate a tightening of credit. Negative values indicate a loosening of credit.

Measures of Wholesale Bank Funding Costs

This chart shows the 3-month Canadian Dealer Offered Rate (CDOR), 5-year debt swapped into 3-month floating-rate debt, and the 3-month overnight index swap (OIS) rate. The 3-month CDOR is the average bid-side rate for Canadian bankers' acceptances determined daily from a survey of market makers and can be used as a proxy for the cost of 3-month bank funding. Five-year debt swapped into 3-month floating rate debt is an indicator of the rate for senior deposit notes, and provides an indication of the longer-term cost of bank funding. The 3-month OIS rate represents the expected overnight interest rate over the 3-month period and can be used as a point of reference to compare the two measures of the cost of wholesale bank funding.

Sources: Bloomberg, Canadian commercial banks, and Bank of Canada calculations

Trends in Key Interest Rates

This table shows changes in key interest rates.

Selected Interest Rates
Overnight rate Prime Rate Estimated variable mortgage rate Posted 5-year mortgage rate Three-month bankers' acceptances Long-term corporate bond rate Weekly effective household interest rate (1) Weekly effective business interest rate (2)
July 31, 2007 4.50 6.25 5.35 7.24 4.75 5.42 6.40 6.12
October 18, 2007 4.50 6.25 5.65 7.43 4.85 5.41 6.56 6.11
December 06, 2007 4.25 6.00 5.40 7.37 4.70 5.36 6.51 5.99
January 24, 2008 4.00 5.75 5.25 7.39 4.06 5.30 6.35 5.80
April 24, 2008 3.00 4.75 4.15 6.99 3.23 5.32 5.48 5.20
July 17, 2008 3.00 4.75 4.20 7.09 3.29 5.48 5.40 5.35
October 23, 2008 2.25 4.00 5.00 7.20 2.68 5.99 5.93 5.82
December 11, 2008 1.50 3.50 4.50 6.73 1.77 6.04 5.47 5.75
January 22, 2009 1.00 3.00 3.80 5.90 1.06 5.90 4.93 5.28
March 5, 2009 0.50 2.50 3.30 5.74 0.69 5.86 4.51 4.97
April 23, 2009 0.25 2.25 3.00 5.25 0.46 5.32 4.12 4.20
June 8, 2009 0.25 2.25 2.85 5.52 0.43 4.83 4.12 3.81
July 23, 2009 0.25 2.25 2.65 5.85 0.44 4.54 4.26 3.50
September 14, 2009 0.25 2.25 2.45 5.50 0.43 4.08 4.13 3.32
October 22, 2009 0.25 2.25 2.25 5.80 0.43 4.06 4.00 3.30
December 10, 2009 0.25 2.25 2.15 5.49 0.44 3.89 3.86 3.27
January 21, 2010 0.25 2.25 2.05 5.47 0.44 3.72 3.83 3.21
April 22, 2010 0.25 2.25 1.75 6.10 0.69 4.24 3.97 3.27
July 22, 2010 0.75 2.75 2.15 5.79 1.03 3.99 4.11 3.43

  1. The effective interest rate for households is a weighted-average of various mortgage and consumer credit interest rates. The weights are derived from residential mortgage and consumer credit data, adjusted for additional information provided by financial institutions.
  2. The effective interest rate for businesses is a weighted-average borrowing rate for new lending to non-financial businesses, estimated as a function of bank and market interest rates. The weights are derived from business credit data.

Sources: Long-term corporate bond rate, Bloomberg; all other series, Bank of Canada

Weekly Effective Interest Rates

The effective interest rate for households is a weighted-average of various mortgage and consumer credit interest rates. The weights are derived from residential mortgage and consumer credit data, adjusted for additional information provided by financial institutions. The effective interest rate for businesses is a weighted-average borrowing rate for new lending to non-financial businesses, estimated as a function of bank and market interest rates. The weights are derived from business credit data. Learn more.