Canadians Owe Over $294 Billion Secured Against Their Home Equity

Dated: 12/27/2018

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Canadians Owe Over $294 Billion Secured Against Their Home Equity

Canadian real estate owners borrowed another billion of their home equity. Office of the Superintendent of Financial Institutions (OSFI) numbers show the balance of loans secured by home equity hit a new record in October. The balance, which is slowing in growth, is primarily consumers borrowing for personal consumption.

Loans Secured By Residential Property

Loans secured by residential real estate are when a borrower pledges a home as collateral for a loan. Securing debt with real estate allows borrowers to get both cheaper and larger loans. The most popular form of debt issued this way is a home equity line of credit (HELOC). Regulators like to split the category into two segments, personal or business.

Personal and business loans secured by home equity are done the same way, but mean different things. Personal loans are generally for consumption, meaning the cash is mostly gone. Banks pitch consumers on these loans for vacations or suggest using it as a downpayment on a second home. Business loans are routine, since new companies often need a personal asset guarantee. Seeing growth in personal loans means people need short-term cashflow assistance to consume. That’s generally a bad thing. Seeing a rise in business loans means businesses are confident in expanding, which is a good sign. We want to see low growth in personal, and high growth in business ideally.

Total Debt Secured By Home Equity Rises To Over $294 Billion

The total of debt secured by residential real estate hit a new record. The outstanding balance of these loans reached $294.16 billion in October, up 0.63% from the month before. That’s an increase of 4.5%, when compared to the same month last year. We’re still seeing substantial growth, but it’s a lot slower than last year.

Total Loans Secured With Residential Real Estate

The total of personal and business loans, secured with residential real estate.

Canadian Dollars (x1000)Jan 2012Apr 2012Jul 2012Oct 2012Jan 2013Apr 2013Jul 2013Oct 2013Jan 2014Apr 2014Jul 2014Oct 2014Jan 2015Apr 2015Jul 2015Oct 2015Jan 2016Apr 2016Jul 2016Oct 2016Jan 2017Apr 2017Jul 2017Oct 2017Jan 2018Apr 2018Jul 2018Oct 2018$220,000,000$230,000,000$240,000,000$250,000,000$260,000,000$270,000,000$280,000,000$290,000,000$300,000,000Canadian Dollars (x1,000)
MonthCanadian Dollars (x1000)
Jan 2012230,290,890
Feb 2012229,298,638
Mar 2012241,436,349
Apr 2012231,917,053
May 2012234,146,682
Jun 2012236,376,315
Jul 2012236,695,957
Aug 2012237,563,598
Sep 2012239,671,791
Oct 2012240,644,082
Nov 2012240,320,176
Dec 2012240,535,868
Jan 2013235,661,227
Feb 2013237,261,584
Mar 2013236,904,576
Apr 2013238,121,821
May 2013238,252,078
Jun 2013238,676,254
Jul 2013237,025,810
Aug 2013237,514,648
Sep 2013237,075,430
Oct 2013237,687,429
Nov 2013237,824,397
Dec 2013237,625,886
Jan 2014238,749,120
Feb 2014238,809,070
Mar 2014237,435,869
Apr 2014237,904,314
May 2014238,967,201
Jun 2014239,338,148
Jul 2014240,341,404
Aug 2014240,380,379
Sep 2014241,301,225
Oct 2014241,502,082
Nov 2014241,355,239
Dec 2014243,542,363
Jan 2015245,053,319
Feb 2015247,667,606
Mar 2015248,260,731
Apr 2015246,720,406
May 2015247,902,391
Jun 2015250,209,405
Jul 2015250,689,534
Aug 2015249,937,546
Sep 2015251,058,890
Oct 2015249,746,488
Nov 2015251,647,201
Dec 2015251,299,652
Jan 2016250,067,870
Feb 2016249,819,472
Mar 2016249,197,862
Apr 2016248,110,917
May 2016250,267,206
Jun 2016251,260,178
Jul 2016252,411,245
Aug 2016253,712,679
Sep 2016254,399,817
Oct 2016258,188,335
Nov 2016258,760,009
Dec 2016258,482,956
Jan 2017260,801,576
Feb 2017263,150,776
Mar 2017264,216,039
Apr 2017267,310,353
May 2017270,136,921
Jun 2017281,650,605
Jul 2017282,400,226
Aug 2017278,667,563
Sep 2017279,640,911
Oct 2017281,494,451
Nov 2017282,888,641
Dec 2017282,474,228
Jan 2018281,466,406
Feb 2018283,650,747
Mar 2018284,644,859
Apr 2018279,778,316
May 2018284,850,448
Jun 2018286,816,971
Jul 2018289,689,685
Aug 2018290,986,616
Sep 2018292,305,630
Oct 2018294,163,611

Source: Regulatory Filings, Better Dwelling.

The total growth rate is still high, but a lot lower than last year. Last year this time, we saw the 12 month pace of growth hit 9.03% in October. That puts the growth rate at 50% lower than the same month last year.

Personal Loans Secured By Home Equity Rise To Over $264 Billion

The vast majority of loans secured by home equity are for non-business purposes. The outstanding balance in this segment reached $264.76 billion in October, up 0.55% from the month before. That’s an increase of 6.12%, when compared to the same month last year. Personal loans in this segment have hit a new record, but the pace of growth is starting to taper lower.

Personal Loans Secured With Residential Real Estate

The total of personal loans, secured with residential real estate.

Canadian Dollars (x 1000)Jan 2012Apr 2012Jul 2012Oct 2012Jan 2013Apr 2013Jul 2013Oct 2013Jan 2014Apr 2014Jul 2014Oct 2014Jan 2015Apr 2015Jul 2015Oct 2015Jan 2016Apr 2016Jul 2016Oct 2016Jan 2017Apr 2017Jul 2017Oct 2017Jan 2018Apr 2018Jul 2018Oct 2018$210,000,000$220,000,000$230,000,000$240,000,000$250,000,000$260,000,000$270,000,000Canadian Dollars (x1,000)
MonthCanadian Dollars (x 1000)
Jan 2012218,320,917
Feb 2012218,874,898
Mar 2012219,504,070
Apr 2012220,618,841
May 2012222,426,851
Jun 2012224,055,224
Jul 2012224,517,295
Aug 2012225,291,172
Sep 2012226,040,631
Oct 2012226,953,927
Nov 2012226,413,109
Dec 2012226,161,532
Jan 2013223,089,352
Feb 2013223,916,917
Mar 2013223,299,722
Apr 2013223,359,858
May 2013223,583,164
Jun 2013223,885,121
Jul 2013222,432,987
Aug 2013222,764,741
Sep 2013222,116,061
Oct 2013222,269,792
Nov 2013222,372,947
Dec 2013222,269,742
Jan 2014222,546,354
Feb 2014223,012,322
Mar 2014222,853,218
Apr 2014223,415,558
May 2014223,220,658
Jun 2014223,379,718
Jul 2014224,065,710
Aug 2014223,820,704
Sep 2014224,764,273
Oct 2014224,867,829
Nov 2014225,117,734
Dec 2014226,083,063
Jan 2015227,700,169
Feb 2015227,906,330
Mar 2015228,264,960
Apr 2015226,907,682
May 2015228,037,515
Jun 2015228,658,918
Jul 2015229,323,549
Aug 2015228,885,889
Sep 2015229,965,746
Oct 2015228,990,556
Nov 2015230,480,279
Dec 2015230,446,451
Jan 2016229,492,873
Feb 2016229,250,901
Mar 2016228,493,353
Apr 2016228,443,333
May 2016230,215,161
Jun 2016231,585,557
Jul 2016232,364,562
Aug 2016232,825,326
Sep 2016233,495,729
Oct 2016234,808,679
Nov 2016235,298,203
Dec 2016235,049,538
Jan 2017234,034,890
Feb 2017235,550,583
Mar 2017236,747,773
Apr 2017239,226,402
May 2017241,759,829
Jun 2017245,414,119
Jul 2017246,568,721
Aug 2017247,075,861
Sep 2017247,953,663
Oct 2017249,493,064
Nov 2017250,370,543
Dec 2017250,185,494
Jan 2018249,733,976
Feb 2018251,645,705
Mar 2018252,150,974
Apr 2018254,750,267
May 2018256,802,535
Jun 2018258,972,485
Jul 2018260,853,190
Aug 2018262,059,422
Sep 2018263,308,319
Oct 2018264,761,095

Source: Regulatory Filings, Better Dwelling.

October’s growth rate is down from the same time last year, and following a trend of slower growth. The 6.12% 12 month change in October is slightly lower than the month before. It’s also 2.08% lower than the same month last year. That said, the rise in the cost of servicing these loans should have reduced the pace of growth much more.

Business Loans Secured By Home Equity Falls To $29 Billion

The balance of business loans secured by home equity is falling. The outstanding balance fell to $29.402 billion, up 1.39% from the month before. The outstanding balance is now down 8.12%, compared to the same month last year. Unfortunately, the segment that we want to see growth in, is falling the fastest.

Business Loans Secured With Residential Real Estate

The total of business loans, secured with residential real estate.

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Steven Axford

Steve Axford grew up in Victoria, BC and has always been active in his community. Steve is a Victoria Cougars Hockey Team alumni as well as a Victoria Shamrocks (intermediate) alumni. During his time....

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