HELOC debts keep growing in Canada

The recent data from the Office of the Superintendent of Financial Institutions says home equity line of credit (HELOC) outstanding balances rose by 0.6% in June compared to May and by 2.9% from a year ago, reaching $171.1 billion.

“It is the largest annual hike in almost a decade,” – Better Dwelling noted. “The 2.9% growth reported in June was the strongest since February 2013. The increase of combined loan plans has significantly reduced the growth rate in this sector, so it’s just a part of the loans secured by home equity.”

It was also supported by the increasing number of Canadians who are attracted to this loan type. According to the latest poll by Bloomberg, about 27% of homeowners have a HELOC in Canada.

Of this number, 78% had used their HELOCs. Canadians who requested their HELOCs from their lenders would use it more often (85%) than those who were offered it (71%).

Almost three in five (58%) respondents currently have outstanding balances on their HELOCs: 10% borrowed $50,000-$100,000; another 10% – more than $100,000; and the rest – less than $50,000.

The survey also shows that 43% of Canadians used their HELOCs for home renovations, another 30% chose to use it for debt consolidation and 13% spent it on vacations.