Comments on: Canada’s HELOC Debt Is Growing Just As Fast As Last Year, Even With Higher Rates

By: Jeff Peterson

Jeff Peterson — Fri, 23 Nov 2018 19:58:35 +0000

Is there any data on the average ratio of the amount of money borrowed from the HELOC to the current market value of the underlying real estate asset? If it is low, say 10%, that doesn’t sound too bad. If however people are pushing it really high, like up to the HELOC limits, that would tell a very different story. Also is there any data to indicate how much is actually invested in businesses and how much is invested back into real estate, e.g. for secondary income producing properties? The latter could amplify the effect of a more serious crash than the recent corrections in Vancouver and Toronto.

By: Cat

Cat — Thu, 22 Nov 2018 22:58:26 +0000

Better be careful, 60 to 100 thousand a year for seniors home, would burn a lot up.

By: SUMSKILLZ

SUMSKILLZ — Thu, 22 Nov 2018 22:56:07 +0000

In reply to Scott MacKinnon.

The Elders in my family all have huge debts to finance a retirement lifestyle they did not plan for. When all is said and done, nothing but crumbs will be left over. Assets will also need to be liquidated at a discount when the time comes.

I hear the same story from colleagues at work, neighbours. The inheritances are all spent.

What is really scary, is when there is no money left to cover assisted living facility costs. What becomes of these people? Folks live long these days. Are you taking them in? Will they fit in your tiny condo? Yikes, that will be the real horror show.

By: Scott MacKinnon

Scott MacKinnon — Thu, 22 Nov 2018 22:06:45 +0000

I wonder what percentage of this debt will be (or is planning to be) paid off by inheritances? The boomers are aging and have amassed considerable wealth. Where will it go?

By: Oakville Rob

Oakville Rob — Thu, 22 Nov 2018 19:51:32 +0000

“Business loans secured by residential real estate can be a positive indicator…It means the borrower is confident in the environment for business expansion.” – I think that is wishful typing. ‘Jobs’ have been replaced by ‘contracts’ and ‘freelance’. Credit via a business loan is different means to the same end. The debt ends up financing ‘operating expenses’ like cars and food.

By: ken

ken — Thu, 22 Nov 2018 18:17:05 +0000

What about the “loans secured with R/E to make mortgage and car payments” now that Canada’s economy is tanking? I bet that’s what’s really going on with personal loans.

By: Veronica

Veronica — Thu, 22 Nov 2018 18:11:38 +0000

In reply to Joe. heloc limit can only be 65% of your value. yes, you can re-mortgage to 80% (if you qualify). I deal with a real estate office here in the Fraser Valley, the realtors all behaving like snakes locked in a glass box. tick tock indeed

By: @xelan_gta

@xelan_gta — Thu, 22 Nov 2018 17:52:03 +0000

RE market is insane, those who believe in strong fundamentals should explain that HELOC & Private Lending share growth first. Those are you genuine fundamentals which are barely holding RE market afloat in GTA.
I’m pretty sure those recent changes will reduce that HELOC growth significantly.
https://www.ratespy.com/got-a-heloc-your-mortgage-options-are-about-to-shrink-11067208

Good luck paying $800k for typical pre-construction condo in GTA.

By: RAB

RAB — Thu, 22 Nov 2018 17:02:22 +0000

Too many people funding a lifestyle they can’t afford because they think they need to live that life.

Citizens transformed into Good. Little. Consumers.

Next Global Financial Crisis will be worse than 2009, plus it will potentially leak into Politics.

Go to Ground

By: Lessdanadalla

Lessdanadalla — Thu, 22 Nov 2018 16:54:43 +0000

In reply to Trevor.

@Rustinpeace
You doubt banks will ever call those overblown HELOCs? Oh boy, watch and learn and repeat after me … banks WON’T look the other way.