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Canadians Using Real Estate For Personal Loans Accelerates For A 5th Month
Canadians took a break from borrowing home equity, but are back in full force.
Office of the Superintendent of Financial Institutions (OSFI) filings show home equity borrowing reached a new record high in November.
The month was also the fifth consecutive we’ve seen acceleration of growth in this segment.
Loans Secured By Residential Real Estate
Regular readers can skip this, but for new readers – here’s a quick explanation.
Loans secured by residential real estate are when borrowers use their home equity to secure a loan.
The most common form of these loans are home equity lines of credit (HELOCs), but there are a few other similar loans. By pledging home equity, they can borrow at a lower rate than an unsecured borrower. They can also often skip those pesky income checks that make sure you can pay the loan back. These loans fall under two categories – personal or business.
Both loans are done in similar fashions, but they mean different things. Personal loans are generally for consumption, and are used for non-productive reasons. Canadian banks advertise these as a “convenient way to buy a second property”, or finance a vacation. Not the worst way to spend it, but it’s a non-productive pillaging of home equity. That can become a problem when you’re borrowing at peak prices.
A business loan secured by residential real estate is typically for productive reasons. A borrower is pledging their home equity for access to business capital. Since people borrow to expand their business, this is considered a positive sign. These borrowers are not just borrowing to make a productive investment. They’re also demonstrating that they’re confident enough in the economy to expand at this time. We want to see growth here.
Canadians Borrowed Over $296 Billion Of Home Equity
Canadian households set a new record for borrowing home equity. Bank filings show households owe over $296.2 billion in November, up 0.7% from the month before. This represents a 4.72% increase compared to the same month last year. It’s also the fifth consecutive month we’ve seen this number grow. Let’s break it down to see where this growth is coming from.
Total Loans Secured With Residential Real Estate
The total of personal and business loans, secured with residential real estate.
Month | Canadian Dollars (x1000) |
---|---|
Jan 2012 | 230,290,890 |
Feb 2012 | 229,298,638 |
Mar 2012 | 241,436,349 |
Apr 2012 | 231,917,053 |
May 2012 | 234,146,682 |
Jun 2012 | 236,376,315 |
Jul 2012 | 236,695,957 |
Aug 2012 | 237,563,598 |
Sep 2012 | 239,671,791 |
Oct 2012 | 240,644,082 |
Nov 2012 | 240,320,176 |
Dec 2012 | 240,535,868 |
Jan 2013 | 235,661,227 |
Feb 2013 | 237,261,584 |
Mar 2013 | 236,904,576 |
Apr 2013 | 238,121,821 |
May 2013 | 238,252,078 |
Jun 2013 | 238,676,254 |
Jul 2013 | 237,025,810 |
Aug 2013 | 237,514,648 |
Sep 2013 | 237,075,430 |
Oct 2013 | 237,687,429 |
Nov 2013 | 237,824,397 |
Dec 2013 | 237,625,886 |
Jan 2014 | 238,749,120 |
Feb 2014 | 238,809,070 |
Mar 2014 | 237,435,869 |
Apr 2014 | 237,904,314 |
May 2014 | 238,967,201 |
Jun 2014 | 239,338,148 |
Jul 2014 | 240,341,404 |
Aug 2014 | 240,380,379 |
Sep 2014 | 241,301,225 |
Oct 2014 | 241,502,082 |
Nov 2014 | 241,355,239 |
Dec 2014 | 243,542,363 |
Jan 2015 | 245,053,319 |
Feb 2015 | 247,667,606 |
Mar 2015 | 248,260,731 |
Apr 2015 | 246,720,406 |
May 2015 | 247,902,391 |
Jun 2015 | 250,209,405 |
Jul 2015 | 250,689,534 |
Aug 2015 | 249,937,546 |
Sep 2015 | 251,058,890 |
Oct 2015 | 249,746,488 |
Nov 2015 | 251,647,201 |
Dec 2015 | 251,299,652 |
Jan 2016 | 250,067,870 |
Feb 2016 | 249,819,472 |
Mar 2016 | 249,197,862 |
Apr 2016 | 248,110,917 |
May 2016 | 250,267,206 |
Jun 2016 | 251,260,178 |
Jul 2016 | 252,411,245 |
Aug 2016 | 253,712,679 |
Sep 2016 | 254,399,817 |
Oct 2016 | 258,188,335 |
Nov 2016 | 258,760,009 |
Dec 2016 | 258,482,956 |
Jan 2017 | 260,801,576 |
Feb 2017 | 263,150,776 |
Mar 2017 | 264,216,039 |
Apr 2017 | 267,310,353 |
May 2017 | 270,136,921 |
Jun 2017 | 281,650,605 |
Jul 2017 | 282,400,226 |
Aug 2017 | 278,667,563 |
Sep 2017 | 279,640,911 |
Oct 2017 | 281,494,451 |
Nov 2017 | 282,888,641 |
Dec 2017 | 282,474,228 |
Jan 2018 | 281,466,406 |
Feb 2018 | 283,650,747 |
Mar 2018 | 284,644,859 |
Apr 2018 | 279,778,316 |
May 2018 | 284,850,448 |
Jun 2018 | 286,816,971 |
Jul 2018 | 289,689,685 |
Aug 2018 | 290,986,616 |
Sep 2018 | 292,305,630 |
Oct 2018 | 294,163,611 |
Nov 2018 | 296,245,818 |
Source: Regulatory Filings, Better Dwelling.
Canadians Secured $266 Billion Of Personal Loans With Home Equity
Personal loans represented the vast majority of debt secured by home equity. Banks held $266.4 billion in November, up 0.63% from the month before. This represents a 6.42% increase compared to the same month last year. In addition, this is also the fifth consecutive month the annual pace of growth has accelerated. Households are increasingly turning to home equity to fuel personal loans once again.
Personal Loans Secured With Residential Real Estate
The total of personal loans, secured with residential real estate.
Month | Canadian Dollars (x 1000) |
---|---|
Jan 2012 | 218,320,917 |
Feb 2012 | 218,874,898 |
Mar 2012 | 219,504,070 |
Apr 2012 | 220,618,841 |
May 2012 | 222,426,851 |
Jun 2012 | 224,055,224 |
Jul 2012 | 224,517,295 |
Aug 2012 | 225,291,172 |
Sep 2012 | 226,040,631 |
Oct 2012 | 226,953,927 |
Nov 2012 | 226,413,109 |
Dec 2012 | 226,161,532 |
Jan 2013 | 223,089,352 |
Feb 2013 | 223,916,917 |
Mar 2013 | 223,299,722 |
Apr 2013 | 223,359,858 |
May 2013 | 223,583,164 |
Jun 2013 | 223,885,121 |
Jul 2013 | 222,432,987 |
Aug 2013 | 222,764,741 |
Sep 2013 | 222,116,061 |
Oct 2013 | 222,269,792 |
Nov 2013 | 222,372,947 |
Dec 2013 | 222,269,742 |
Jan 2014 | 222,546,354 |
Feb 2014 | 223,012,322 |
Mar 2014 | 222,853,218 |
Apr 2014 | 223,415,558 |
May 2014 | 223,220,658 |
Jun 2014 | 223,379,718 |
Jul 2014 | 224,065,710 |
Aug 2014 | 223,820,704 |
Sep 2014 | 224,764,273 |
Oct 2014 | 224,867,829 |
Nov 2014 | 225,117,734 |
Dec 2014 | 226,083,063 |
Jan 2015 | 227,700,169 |
Feb 2015 | 227,906,330 |
Mar 2015 | 228,264,960 |
Apr 2015 | 226,907,682 |
May 2015 | 228,037,515 |
Jun 2015 | 228,658,918 |
Jul 2015 | 229,323,549 |
Aug 2015 | 228,885,889 |
Sep 2015 | 229,965,746 |
Oct 2015 | 228,990,556 |
Nov 2015 | 230,480,279 |
Dec 2015 | 230,446,451 |
Jan 2016 | 229,492,873 |
Feb 2016 | 229,250,901 |
Mar 2016 | 228,493,353 |
Apr 2016 | 228,443,333 |
May 2016 | 230,215,161 |
Jun 2016 | 231,585,557 |
Jul 2016 | 232,364,562 |
Aug 2016 | 232,825,326 |
Sep 2016 | 233,495,729 |
Oct 2016 | 234,808,679 |
Nov 2016 | 235,298,203 |
Dec 2016 | 235,049,538 |
Jan 2017 | 234,034,890 |
Feb 2017 | 235,550,583 |
Mar 2017 | 236,747,773 |
Apr 2017 | 239,226,402 |
May 2017 | 241,759,829 |
Jun 2017 | 245,414,119 |
Jul 2017 | 246,568,721 |
Aug 2017 | 247,075,861 |
Sep 2017 | 247,953,663 |
Oct 2017 | 249,493,064 |
Nov 2017 | 250,370,543 |
Dec 2017 | 250,185,494 |
Jan 2018 | 249,733,976 |
Feb 2018 | 251,645,705 |
Mar 2018 | 252,150,974 |
Apr 2018 | 254,750,267 |
May 2018 | 256,802,535 |
Jun 2018 | 258,972,485 |
Jul 2018 | 260,853,190 |
Aug 2018 | 262,059,422 |
Sep 2018 | 263,308,319 |
Oct 2018 | 264,761,095 |
Nov 2018 | 266,439,014 |
Source: Regulatory Filings, Better Dwelling.
Canadians Secured $29 Billion Of Business Loans With Home Equity
The balance of business loans secured with home equity is falling. Banks held $29.8 billion in November, up 1.37% from the month before. This represents an 8.34% decline compared to the same month last year. It’s also the 8th month in a row that we’ve seen this number showing negative annual growth. Why wouldn’t the credit segment we want to see expand, shrink right here?
Business Loans Secured With Residential Real Estate
The total of business loans, secured with residential real estate.
Month | Canadian Dollars (x 1,000) |
---|---|
Jan 2012 | 11,969,973 |
Feb 2012 | 10,423,740 |
Mar 2012 | 21,932,279 |
Apr 2012 | 11,298,212 |
May 2012 | 11,719,831 |
Jun 2012 | 12,321,091 |
Jul 2012 | 12,178,662 |
Aug 2012 | 12,272,426 |
Sep 2012 | 13,631,160 |
Oct 2012 | 13,690,155 |
Nov 2012 | 13,907,067 |
Dec 2012 | 14,374,336 |
Jan 2013 | 12,571,875 |
Feb 2013 | 13,344,667 |
Mar 2013 | 13,604,854 |
Apr 2013 | 14,761,963 |
May 2013 | 14,668,914 |
Jun 2013 | 14,791,133 |
Jul 2013 | 14,592,823 |
Aug 2013 | 14,749,907 |
Sep 2013 | 14,959,369 |
Oct 2013 | 15,417,637 |
Nov 2013 | 15,451,450 |
Dec 2013 | 15,356,144 |
Jan 2014 | 16,202,766 |
Feb 2014 | 15,796,748 |
Mar 2014 | 14,582,651 |
Apr 2014 | 14,488,756 |
May 2014 | 15,746,543 |
Jun 2014 | 15,958,430 |
Jul 2014 | 16,275,694 |
Aug 2014 | 16,559,675 |
Sep 2014 | 16,536,952 |
Oct 2014 | 16,634,253 |
Nov 2014 | 16,237,505 |
Dec 2014 | 17,459,300 |
Jan 2015 | 17,353,150 |
Feb 2015 | 19,761,276 |
Mar 2015 | 19,995,771 |
Apr 2015 | 19,812,724 |
May 2015 | 19,864,876 |
Jun 2015 | 21,550,487 |
Jul 2015 | 21,365,985 |
Aug 2015 | 21,051,657 |
Sep 2015 | 21,093,144 |
Oct 2015 | 20,755,932 |
Nov 2015 | 21,166,922 |
Dec 2015 | 20,853,201 |
Jan 2016 | 20,574,997 |
Feb 2016 | 20,568,571 |
Mar 2016 | 20,704,509 |
Apr 2016 | 19,667,584 |
May 2016 | 20,052,045 |
Jun 2016 | 19,674,621 |
Jul 2016 | 20,046,683 |
Aug 2016 | 20,887,353 |
Sep 2016 | 20,904,088 |
Oct 2016 | 23,379,656 |
Nov 2016 | 23,461,806 |
Dec 2016 | 23,433,418 |
Jan 2017 | 26,766,686 |
Feb 2017 | 27,600,193 |
Mar 2017 | 27,468,266 |
Apr 2017 | 28,083,951 |
May 2017 | 28,377,092 |
Jun 2017 | 36,236,486 |
Jul 2017 | 35,831,505 |
Aug 2017 | 31,591,702 |
Sep 2017 | 31,687,248 |
Oct 2017 | 32,001,387 |
Nov 2017 | 32,518,098 |
Dec 2017 | 32,288,734 |
Jan 2018 | 31,732,430 |
Feb 2018 | 32,005,042 |
Mar 2018 | 32,493,885 |
Apr 2018 | 25,028,049 |
May 2018 | 28,047,913 |
Jun 2018 | 27,844,486 |
Jul 2018 | 28,836,495 |
Aug 2018 | 28,927,194 |
Sep 2018 | 28,997,311 |
Oct 2018 | 29,402,516 |
Nov 2018 | 29,806,804 |
Source: Regulatory Filings, Better Dwelling.
Canadians printed a new record for debt secured by residential real estate. Many lenders and regulators likely didn’t think much of the issue as prices made record gains. However, we’ve officially entered an era where home prices are growing at a slower pace than the equity being extracted. That means without a price drop, home equity is disappearing faster than it’s being built.
Article Reference: www.betterdwelling.com
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