Canadian Home Equity Loans Surged After Regulator Warnings

Canadian homeowners have been using their home equity to secure an alarming amount of debt. Filings with OSFI, Canada’s bank regulator, show the value of loans secured by housing continued to advance in October. Over the past year, growth of loans secured by home equity has surged at one of the fastest rates ever. It’s still too early to tell, but there are some signs that higher interest rates have begun to slow the pace of borrowing. 

Canadians Have $309 Billion In Home Equity Debt

Canadian homeowners have borrowed against a significant amount of equity. Loans secured by home equity rocketed to $308.9 billion in October, up 0.1% (+$0.3 billion) from a month before. The balance is a whopping 9.6% (+$27.0 billion) higher compared to the same month last year. For comparison, it’s equivalent in size to Alberta’s gross domestic product (GDP). It’s huge for consumer loans.  

Canadian Debt Secured By Home Equity

Canadian household debt secured by residential real estate equity.

Source: Bank of Canada; Better Dwelling.

Canadians Using Their Home As An ATM Might Be Slowing

Monthly growth shows some signs of the trend slowing. October’s growth rate was the smallest in nearly two years, last matched in January 2021. It was also the worst October since 2019, when interest rates last hit a cycle peak. The slow month put an end to the highest annual growth reported in decades, possibly ever. 

Canadian Debt Secured By Home Equity Growth

The annual growth of household debt secured by residential real estate equity. 

Source: Bank of Canada; Better Dwelling.

Annual growth is just off the record rate but still flying very high for such a large debt pile. October’s numbers show the fourth largest annual rate, beat only by the three preceding months. A single month of deceleration doesn’t make a trend, but the sharp rate drop indicates there’s suddenly a lack of interest in this area. 

The surge in growth comes after repeated warnings from the bank regulator. OSFI has found increasing evidence that indicates homeowners have been using their home equity to finance their lifestyle. This both hides their vulnerability, as well as ties economic consumption to home values. It provides a greater risk when the surge is aligned with unsustainable home price growth, like we just saw. Any economic shock or a home price correction can compound fallout to the economy as this problem grows. 



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  • Ray 1 year ago

    Borrow until Bankrupt
    It’s all coming down.

    • V 1 year ago

      Seriously decreasing housing prices remain an existential threat to multiple levels of the Canadian government federally and provincially (+ banks), let alone a whole slew of degenerate gamblers er I mean Canadian “investors”; I wouldn’t bet on the whole thing collapsing.

      As they have done several times in the past, dear Gov will probably find a way to keep prices from spiraling, regardless of the consequences. After all, protecting the most financially wreckless is written into our constitution (isn’t it?).

  • Undergrad 1 year ago

    So the low-income earners who don’t own a property have to pay 21-30% credit card interest to buy groceries which enrich Sobeys and Weston, while the asset-owners get to borrow money to buy more homes, vehicles and party all year on cruise ships, at pennies of that cost via HELOCs?

    • Canadian Banker 1 year ago

      Your credit card interest should have only changed if you missed a payment or have bad credit and present a risk. Plenty of room between the overnight rate and the 1`9% interest rate they charged at the pandemic low.

  • Kjacks 1 year ago

    Again, at 2015 something changes. It seems to be a pattern regarding housing.

    • darkesha 1 year ago

      Almost like we got a new federal gov. who loves to spend spend spend spend….

  • Daniel Ziffle 1 year ago

    Best is to margin heloc to buy the dip…in Tesla and Aark plus bitcon

    • Joe 1 year ago


    • W8 1 year ago

      These sophisticated investors have already maxed out their HELOC’s buying depreciating assets at all time high’s. Only down 20 to 25%… so far.

  • Yacoob Bayat 1 year ago

    We were always told that Canadian Banks and Canadian fiscal policy was rock solid and different from the rest of the world. We are conservative and we really follow a responsible fiscal policy and so do our banks.

    However, over the last decade, Canadian banks and the Canadian government decided to bury their heads in the sand and this has led to the current situation where they are all saying ” we do not know what happened ”

    Let’s face it – everyone knew what they were doing. The situation we are in is not by accident. It was willful and created with the full presence of mind of all those involved.

    We are NOT a fiscally responsible nation. We are just a bunch of greedy gamblers.

    Which ordinary working class Canadian can AFFORD a home today ?

    Please save me the nonsense that a home is worth the $1 million that it is selling for.
    The vast majority of Canadians earn less than $30 per hour
    The overwhelmingly vast majority of Canadians do NOT have $200 000 cash to put down a deposit on a home purchase

    So now the slicksters in power have a new story to tell …….

    ” It is not necessary to buy a home to be happy ”

    Yesterday their story was …..
    ” True success is to buy a property ”

    That’s the American dream that you always read about ….

    Did I say American ? I mean that’s the Canadian dream …..

    To be able to buy a home, have a family, buy a car, a phone, go for a vacation, have a BBQ, send the kids to school and be HAPPY.

    Now they want us to believe that it is OK to work 2 jobs – both the husband and wife, let the TV do the baby sitting , or better still, don’t have kids because it’s too expensive, don’t buy, just rent and be happy, cancel the vacation and BBQ, you don’t have time or money for that, do Uber on the side so you can get some spare change for the sky rocketing prices ……

    The ” conservative ” banks have been dishing out these home equity loans on home values that they KNOW are just hot air waiting to deflate.

    They know and rely on a government bailout that is GUARANTEED.

    Nobody has been fiscally responsible
    Everybody has just been fashionably GREEDY and jumped on the greedy wagon so they do not lose out.

    What happened to all the ” smart ” people that supposedly worked in the banks and the government.

    Happy hour lasted too long

    Everything has consequences…..

    Unfortunately we do not have responsible people to deal with our current situation.

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