Canadian HELOC balance has reached a new record high

Canadian HELOC balance has reached a new record high

Canadian HELOC balance has reached a new record high

Canada’s HELOC loan balance reached a historic high in April, passing the $300-billion mark for the first time.

Data from the Office of the Superintendent of Financial Institutions showed that the balance of this loan type reached $300.93 billion on that month, growing by 0.44% from March and by 7.56% from April 2018.

Most of this sum went to consumer debt for personal purposes, accounting for $268.38 billion of the April total. This represented an increase of 0.49% month-over-month and 5.35% annually.

The volume of loans secured by residential real estate has swelled considerably over the past 15 years, and now stands as the second largest portion of debt after mortgages.

“By itself, the loans aren’t good or bad, they’re just leverage. However, the surge in borrowing after real estate values soared can leave borrowers in a precarious situation,” Better Dwelling cautioned in its analysis of the OSFI numbers.

The Credit Counselling Society recently warned that loans continue to define many Canadians’ financial situations, with “unprecedented levels” of debt and no clear savings in place.

Citing data from Statistics Canada, CCS stated that overall consumer debt (including mortgages) swelled to $1.907 trillion during the first quarter of this year – a markedly higher level than the $1.823 trillion observed back in Q1 2018.

The StatsCan figures indicated that as of Q1 2019, the debt-to-income ratio was at 177.6%, while the average household savings rate dropped to 1.1%.

“We continue to hear from Canadians, who are concerned on how to make ends meet as their debt continues to grow. We’re finding Canadian consumers reaching out to CCS for assistance are carrying average debt levels over $30,000,” CCS director of education and community awareness Yanchuk Oleksy said.

“This is alarming, as two decades ago, the average was $12,000 of non-mortgage debt.”