Canadian real estate owners are back to borrowing against their home equity. Office of the Superintendent of Financial Institutions (OSFI) filings show the balance of home equity lines of credit (HELOC) debt reached a new high in June. Growth is no longer near the peak seen a couple of years ago, but still much higher than usual.
Canadian HELOC Debt Rises To Over $302 Billion
Canadian residential real estate used to secure loans topped the previous record. The balance of loans reached $302.23 billion in June, up 0.35% from the month before. This represents an increase of 5.37% compared to the same month last year. The balance is a new all-time high, and the growth rate is still coming in higher than historic levels.
Total Loans Secured With Residential Real Estate
The total of personal and business loans, secured with residential real estate.
Source: Regulatory Filings, Better Dwelling.
The rate of growth fell from this year’s peak, but is higher than last year. The 12-month pace of growth in June fell for a second consecutive month. The 12-month increase is almost twice the pace of growth seen during the same month last year. The growth rate is still below the peak seen in 2017.
Personal Loans Secured By Real Estate Reaches Over $269 Billion
Most of the loans secured by residential real estate is for personal purposes. Personal loans secured by real estate reached $269.06 billion in June, up 0.19% from the month before. Compared to the same month last year, this number is 3.90% higher. Growth here is higher than usual, but is the lowest seen since March 2017, before the surge of growth.
Personal Loans Secured With Residential Real Estate
The total of personal loans, secured with residential real estate.
Source: Regulatory Filings, Better Dwelling.
Over $33 Billion of The Total Debt Is For Business Loans
Business loans secured by residential real estate was behind the majority of growth. Loans for business purposes represented $33.17 billion of the total in June, up 1.66% from the month before. Compared to the same month last year, this number is 19.12% higher. This is compared to a year with no to low growth, so the increase isn’t shocking.
Business Loans Secured With Residential Real Estate
The total of business loans, secured with residential real estate.
Source: Regulatory Filings, Better Dwelling.
Canadians are still scooping HELOC debt, but not quite at the pace of the frenzy. Personal growth has been slowing, helping to moderate total growth. However, they’re still using their home equity to borrow at a much higher clip than normal.
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Are the spikes in growth lining up with new condo releases? It looks like 2015, July 2017, and April 2019 were big peaks. All big release months if I’m not mistaken.
This would line up close to the Vancouver pre-sale releases. Nice catch. Vancouver has the highest HELOC debt per home as well.
Shiller is calling another US housing crash, and they’re also active rate bound.
https://www.bloomberg.com/news/articles/2019-09-05/nobel-laureate-shiller-says-u-s-home-prices-could-start-falling
so in the Fall of 2012 Total HELOC tied to Real Estate $240B and now $302B — so around 26% growth… and those HELOC tied to personal loans the growth has been even less ~ $225 to 270 or 20%
lower LTV ? less leverage it appears? because Cdn Real Estate prices are up much more than 26% since late 2012.
Thanks for the data, makes me feel better. Higher Equity !!
Property values increase for the home owners due to money laundering. They take HELOCs thanks to money laundering. The plebs have to live in slums and the home owners vote for low property taxes on their inflated home values, and the government freezes minimum wage and increases regressive taxes like HST on the poor.
I was wondering how Canadian were still making good profits. Now I know, they own everything. Almost everyone in Canada is in debt and paying interest to bank. Easy to make profit when everyone is in debt towards banks. Notice some of these graph are exponential functions
Guys we need to understand the whole system is unsustainable. The whole economy needs to produce goods or services to sustain itself. All the bubbles are just assest values going beyond their true economic worth as production inputs. Everything ultimately comes down to production and productivity of a society.
If you understand that you will understand Canada is f***ked. First most production, innovation entrepreneurship are done by young people. But our current system drains the life blood of our young families in the form of high taxation to keep boomers alive. Force young families to take on very high debt to buy old crappy places to live from boomers who bought it for 1/10th the price. We are basically sucking the blood from our most productive population and transferring their future to the least productive segment.
By the time young people get old they will not have health care because Canada will be a third world country. We have tons of land in Canada, what we need is use what we have excess of to trade for what we need. IE we should be using affordable housing to get and retain Canadian talent to produce world class companies to generate real wealth. Not sucking the younger generation dry to enrich boomers.
Canada will be third world very soon if we don’t stop this housing cancer.
dooooomed…. : ( parents are leveraging to help their kids but will lose when the collapse kicks in.. this is not the time to over extend yourselves….I was a debt slave once but I’m free now. It only cost me my marriage half my savings and 100 grand to my lawyer….good luck all.