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.