Canadian HELOC Debt Just Made The Biggest Jump Since March 2020

Canadian owners eased on home equity line of credit (HELOC) debt, but they’re warming up to using them again. Office of the Superintendent of Financial Institutions (OSFI) data shows an abrupt jump in HELOC debt for November. The credit segment had been shrinking for over a year, with only a few minor monthly bumps higher. This past November it was different, making the largest jump since the start of the pandemic.

Canadians Owe Over $168 Billion In HELOC Debt

Canadian HELOC debt made a big monthly jump but remained lower than a year ago. The outstanding balance reached $168.03 billion in November, up 0.73% ($1.21 billion) from a month before. It was also 2.71% ($4.69 billion) lower than the same month last year. Even with negative annual growth, this is the highest balance since December 2020.

Canadian Home Equity Line of Credit Debt

The total outstanding balance of home equity line of credit (HELOC) held by institutional lenders.

Source: Regulatory Filings; Better Dwelling.

Canadian HELOC Debt Has The Biggest Month Since March 2020

The monthly movement is worth paying attention to, considering its abruptness. The monthly increase of 0.73% ($1.21 billion) was the largest since March 2020, when the pandemic began. It’s definitely an outlier for November, being the biggest since 2011. Not only is this unusually large growth for any period, it’s a bit of a freak when it comes to November.

Canadian Home Equity Line of Credit Growth

The annual percent change in the outstanding balance of home equity line of credit (HELOC) held by institutional lenders.

Source: Regulatory Filings, Better Dwelling.

HELOC Debt Is Still Lower Than A Year Before

Even with the big monthly jump, HELOC debt is still smaller than a year before. November’s annual growth was 2.71% ($4.69 billion) lower than last year. It’s worth noting that annual declines are getting smaller by the month. The most recent is the smallest annual rate since September 2019. Combined with the big surge in November, the declines might be coming to an end soon.

HELOCs have been falling in growth, but the most recent data showed a massive surge in borrowing. Even without the monthly growth, this doesn’t mean people aren’t cashing in home equity. It’s the opposite, with loans secured by residential real estate soaring. Homeowners are still drawing on their windfall, they’re just using different products. However, November’s data shows HELOCs might be staging a comeback.

7 Comments

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  • Kate 10 months ago

    Nice, lets get more debt to close the current one and do that till it collapse.

  • Tom Bell 10 months ago

    What do most people use a HELOC for? As a Financial Advisor in Vancouver, most large withdrawals I see from a HELOC tend to be for buying another property. Not buying a boat / Porsche as the government or financial commentators may lead on.

    • CM 10 months ago

      Tom, I’m an advisor(president) too and/run my own firm. If clients are leveraging up and/or have the capital to do so they should take advantage of historically low interest rates but be cautious of the current environment due to rising rates and volatility. Buying a BOAT(bring out another thousand) is not a sound investment and your clients need your guidance to not do so.

    • W8 10 months ago

      what could go wrong when taking debts against and then re-investing in same asset class?

  • cptstubing 10 months ago

    HELOC to pay off another HELOC perhaps?

  • RM 10 months ago

    I honestly can’t understand why anyone would choose to take on more debt in this climate. Most people seemingly are fiscally illiterate.

    • Ken 10 months ago

      Agreed….it’s utterly bewildering. Personally, I would have difficulty sleeping at night if I put myself in that position.

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