Sep 25, 2026
When people picture a trade war getting worse, a mortgage renewal isn’t usually the first thing that comes to mind. But it is cause for concern for the CEOs of Canada’s biggest banks. Amidst the escalating Canada-U.S. trade tensions, the officers in charge of Canada’s Big Six banks offered some insight earlier this month — and it wasn’t a warning.
Speaking at the Scotiabank Financials Summit in Toronto on September 9, Royal Bank of Canada (RBC) President and CEO Dave McKay said he’s “a little cautious because of the escalation of the trade war,” but that the credit picture across the bank’s consumer and commercial lending, including in the U.S., is actually improving.
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Scotiabank President and CEO Scott Thomson went further, stating that he doesn’t expect tariffs to meaningfully hurt the bank’s credit performance, since only a relatively small share of Canadian trade is currently tariffed.
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For investors, that’s reassuring given the financial sector’s outsized role in Canada’s economy.
But what about borrowers? Here’s what a bank’s credit outlook actually means for your mortgage, where the real risk is concentrated and what’s worth watching instead of worrying broadly about trade threats and volatile interest rates.
What bank CEOs are actually watching
Bank CEOs refer to a bank’s credit outlook because this snapshot gives them a good overview on whether borrowers — consumers and businesses alike — are likely to keep paying what they owe.
So when McKay describes RBC’s credit outlook as ‘improving’ he’s saying the bank isn’t seeing a broad wave of missed payments.
However, the devil is in the details. McKay also pointed out that sectors directly hit by tariffs are facing a significant degree of uncertainty, and the bank is holding a robust capital buffer specifically to absorb losses if that uncertainty turns into defaults.
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Why ‘positive’ doesn’t mean risk-free
McKay’s assertion that banks or holding capital buffers is key. Banks don’t build up rainy-day funds for borrowers — but they do increase cash reserves when markets are volatile.
McKay didn’t name specific industries, but did confirm that the concerns were for customers regions and sectors most impacted by tariffs. Confirmation that workers in harder hit sectors, like manufacturing, auto parts, steel, aluminium and forestry carry more risk of default than the average mortgaged homeowner working in unrelated industries.
The real question for your mortgage
Thomson highlighted why banks aren’t worried: A relatively small share of Canadian trade is currently tariffed, so the credit shock isn’t hitting every borrower at once.
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For most Canadians, a trade war threatens a mortgage indirectly — through job security in an exposed sector or industry — not through a sudden, economy-wide credit crunch or a bank pulling back on lending across the board.
Keep calm and watch wisely
If you want a genuine read on your own exposure, a few questions matter more than the national headlines:
- How exposed is my industry or employer to U.S. tariffs, and has my workplace signalled any hiring freezes or layoffs?
- When does my mortgage come up for renewal, and is it fixed or variable?
- Do I have savings that could cover a few months of payments if my income was interrupted?
- Have I talked to my lender about options before missing a payment?
Bank CEOs aren’t sounding an alarm on Canadian credit right now, but they are preparing for pockets of stress rather than promising none exists.
For most homeowners, the more useful question isn’t whether the banking system is safe in the abstract — it’s how exposed your own paycheque is to this trade war. That’s the one question worth answering.
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Amy Tokic is an SEO content editor for Money.ca. She holds a B.A. in Communications from the University of Windsor. Amy is an award-winning author and has been writing professionally for 15 years, publishing articles in the lifestyle and health sectors.
