Canadians’ use of home equity loans has continued to soar as high-priced Metro Vancouver and Toronto have seen property values decline.
The steadily inflating rate of Canadians leaning on home-equity lines of credit to bolster their finances has one bond-rating agency casting a wary eye on the real estate market, particularly high-priced Metro Vancouver and Toronto where sales have declined and prices have slid.
And considering the downturn in real estate markets, including Metro Vancouver, that picture leaves borrowers “susceptible to a housing market correction,” although DBRS representatives said that risk is more or less theoretical, as long as the economy remains steady. For individual borrowers, however, the DBRS report said declining real estate values leaves them at risk of winding up with debts that exceed the value of the homes securing their loans, which is referred to as negative equity.
As of February of this year, benchmark prices on detached homes were down anywhere from 1.8 per cent to 16.7 per cent , according to real estate board statistics.
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