Canadians are suddenly not so hot on borrowing their home equity these days. Office of the Superintendent of Financial Institutions (OSFI) filings show the balance of loans secured by home equity, like HELOCs, made a very small increase in August. Growth has been falling due to the personal loan segment seeing slow growth. Business debt secured by home equity is higher than last year, but has also slowed over the past few months.
Debt Secured By Home Equity Up Only 0.58%
The total balance of loans secured by real estate inched higher for a third month, but remains below the peak. The balance outstanding was $305.17 billion in August, virtually flat from the month before with a 0.04% increase. Compared to the same month last year, this represents a 0.58% increase. That’s the lowest rate of annual growth since 2016, and it’s due almost entirely to personal loans drying up.
Total Loans Secured With Residential Real Estate
The total of personal and business loans, secured with residential real estate.Source: Regulatory Filings, Better Dwelling.
Personal Debt Secured By Homes Down 0.34%
The amount of personal loans secured against real estate is lower than last year. The balance hit $269.15 billion in August, up 0.21% from last year. The increase works out to a 0.34% decline from last year. This drop is a little smaller than the month before, but prior to that we haven’t seen a decline like this since 2014.
Personal Loans Secured With Residential Real Estate
The total of personal loans, secured with residential real estate.Source: Regulatory Filings, Better Dwelling.
Business Debt Secured By Homes Rises 8%
Business loans secured against home equity is rising slowing, but is still higher than last year. The balance outstanding reached $36.06 billion in August, down 1.16% from last year. The decline brings the balance 8.03% higher than the same month last year. This number is a little more volatile. With the flood of small business loans programs, it’s not unexpected to see this number drop.
Business Loans Secured With Residential Real Estate
The total of business loans, secured with residential real estate.Source: Regulatory Filings, Better Dwelling.
Deleveraging, at least in real terms, is a mixed sign. Elevated levels of household debt aren’t great to carry during a poor economic environment. On that level, it’s good to see households reducing their liabilities. Credit does drive consumption, on the other hand. Slowing home equity borrowing is going to mean less consumer spending, which can impact various segments. Especially new condo sales, which was a popular purchase to make with home equity.
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