February 20, 2018 4:46 pm

BUSINESS REPORT: Canadians can’t stop using their homes as piggy banks

File photo: Canadians continue to use their homes as piggy banks.

AP Photo/Elise Amendola

Canadians continue to borrow against the value of their houses at the fastest pace in more than five years, using home equity lines of credit, known as HELOCs.

Balances jumped another 7.2 per cent in December from a year earlier, the fastest pace since 2012. It reached a record $230 billion, whereas all other loans climbed only 3.2 per cent.

READ MORE: Home renovations: The 4 big risks of borrowing against your house to pay for it

A report by Bloomberg Intelligence shows borrowers are using the value of their homes to borrow up to 65 per cent of the value for such things as renovations, investing, consolidating debt, or to spend on personal reasons. The report says that the borrowing is either greed or need-based.

The Bank of Canada is particularly worried as HELOC’s do not usually have a fixed repayment schedule compared to other loan types such as credit cards. But with HELOC rates being cheaper, as interest rates increase, so does the debt.

READ MORE: Indebted Canadians using ‘homes as ATMs,’ consumer agency warns

© 2018 Global News, a division of Corus Entertainment Inc.

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