Canadians might not be buying much real estate these days, but they’re borrowing against it. Statistics Canada (StatCan) data shows home equity lines of credit (HELOC) debt surged in October. Households tapped their home equity at one of the fastest rates in years, sending HELOC debt to a 6-year high.
Home Equity Line of Credit (HELOC)
A home equity line of credit (HELOC) lets homeowners borrow against their equity. There are a ton of similar equity loans that are often marketed in the same way. However, today we’re looking at the strictest definition. These are variable-rate loans that only require interest payments to carry. They also tend to be cheaper than unsecured credit lines, making them a weapon of choice for leverage.
Credit isn’t good or bad on its own. It’s how it’s used that can be a problem—and HELOCs are no different. Rising use can be a positive sign, signaling consumer confidence. A popular use is funding renovations and investment, indicating a positive outlook. It can be problematic when tapped to fuel speculation—a problem that pops up regularly.
Canadian HELOC Debt Hits Highest Level In Nearly 6 Years
The outstanding balance of Canadian household home equity lines of credit (HELOC) accounts: In billions of dollars.
Source: StatCan; Better Dwelling.
HELOC debt is climbing steadily in recent months. HELOC debt grew 0.30% (+$539 million) in October to $179.49 billion, the highest level in nearly 6 years. Households generally pulled back on this type of borrowing from 2013 to 2023. However, demand returned last year and has since maintained healthier levels of growth.
Canadian HELOC Growth Returns As Households Tap Home Equity
The outstanding balance of Canadian household home equity lines of credit (HELOC) accounts: 12 month change.
Source: StatCan; Better Dwelling.
Annual growth is accelerating, with some minor seasonal variance. HELOC balances have climbed 3.85% (+$6.65 billion) over the past year—modest, but high by recent standards. As mentioned, credit use rises with consumer and lender confidence, fueling consumption. After all, when times are good, both groups are confident in the outlook and the ability to repay debts. That’s not what’s happening now.
Today’s conditions resemble the investor-fueled borrowing seen in 2017. At the time, regulators flagged the issue largely concentrated in Greater Toronto. In both cases, home sales were soft, but pre-construction completions came in hot. With the largely investor-owned market facing financing risks, it’s hard to miss the warning signs.
The real question is not whather canadians will continue to pile on debt (unelasticity of demand for credit is as bad as food, medical and shelter), but when the credit scheme used by carney and the liberals will finally collapse.
The one thing carney has demonstrated since 2009 is his belief that monetary policy expansipn can continue indefinately, without consequence. Well without consequence to him and his sponsers.
The question is with the main issued facing canada being a direct result of these terrible policies, the issue is how long before its obvious that carney and co are the responsible parties?
The concern should be the failure of canadians to think critically about what passes as analysis and discourse here, not the falling into a disaster of our own making.
How many newcomers have come here, bought a house, taken a heloc, then fled Canada with a suitcase of money?
The biggest concern here is the clear misalignment of govt with what’s actually going on. Carney has been a joke on trade,but his alleged skills as a banker were why he was ‘sold’ as a solution to our problems.
However, he is either the worst economist in the world, or understands he and his buddies are bankrupting canada. To continue to plow billions into supply measures for housing, spending hundreds of billions on projects of little or no value tothe economy,and running large deficits, all while failing to resolve our trade problems with 4 of the world’s 5 largest economies cant fix this mess.
Let’s consider that since he became part of the liberal government in 2020, the chmc ceased to be amortgage insurer, and became a subsidy for the big 5 banks. Using tax player’s tobacco 1.5Tr in bad loans to everyone who shouldn’t have gotten a mortgage was a terrible idea.
So, knowing this data is wrong, is 6-9 mos out of date, what is the carney plan for 2026 when this mess will snowball, and the banks will force the chmc, bdc, edc, cdic, and feds to cough up hundreds of billions to pay themforbad loans they never should have made?
We know how this will play out as moody already told us, our c4edit rating will collapse, the imf willbe called into stabilize, and canada willbe the new greece. Carney is likely even a bigger disaster than the Trudeau 2.0, and Trudeau 1.0 govts, and will wreck canada for generations.