Concern over increased use of home equity credit lines

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For many Canadians the use of home equity has become the credit line of choice, replacing credit cards, and this is worrying say consumer advocates. With interest rates making mortgages even more affordable and high house prices providing a ready source of funds for homeowners. Figures from Statistics Canada show that outstanding home equity credit lines now total $266 billion (as of March 2015) which has increased from $100 billion ten years ago and now account for 59 per cent of non-mortgage debt. The Globe and Mail reports that as mortgage lenders often include credit lines with new homes loans it gives borrowers low-cost and “almost limitless” credit as house prices rise.

Bankruptcy trustee Doug Hoyes says that home equity credit lines become “impulse buys” for consumers and warns that the easier it is to get credit the more consumers take, driving up insolvency rates. Although CAAMP figures show that just 27 per cent of mortgage customers have home credit lines, 90 per cent of those have outstanding balances. The debt advice sector is concerned that homeowners may come unstuck as interest rates rise. 
  • Kevin R on 2015-05-12 11:15:30 AM

    What a presumptuous piece. Seriously, a Bankruptcy Trustee Manager is an expert on consumers & the use of these Helocs is all "Impulse Buying"?? Maybe the PLC product has just become more popular in the last 10 years for people that like it's open flexibility, that like the interest only, that like how it is separated from the regular mortgage to keep records when the PLC is used for investment. Compound that with the fact that lenders like ManuBank sell this product, pay Financial planners finder fees to sell to their clients because they dont want these clients going back to their own predatory Bank for that product. Get some facts before making statements that intelligent people who have equity in their homes use it as an ATM machine/credit card for "impulse buying". I can think of many reasons why PLC's have become popular & replacing what was traditionally regular mortgages. Do an article that is worthy for some discussion like how long has ManuBank been flogging the ManuOne product through the growing sector of Financial/Investment planners(which might relate to the growth of this product) & why are Financial Planners being paid for selling mortgage products when they are not licensed or regulated to do so??

  • Ron Butler on 2015-05-12 1:03:56 PM

    The Globe is running this series for most of the week. There is value to this series even if we can quibble about the details. Compared with some countries we carry a lot of debt in Canada. You can argue good debt versus bad debt till the cows come home but it is a subject worth examining and that is what a newspaper is supposed to do: examine issues.

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