Canadian real estate owners reached a new debt milestone. Office of the Superintendent of Financial Institutions (OSFI) filings show the balance of loans secured by residential real estate reached a new high in April. The new high is the first-time in history the balance has passed the $300 billion mark.

Loans Secured By Residential Real Estate

Loans secured by residential real estate are loans where equity is pledged as collateral. By pledging the home equity, the borrower gets a lower interest rate. In exchange, the lender has something to take away if you default. The most common form of these loans are home equity lines of credit (HELOC). The uses of this debt ranges from securing a business loan, to buying a second condo (banks encourage this).

Over the past 15 years, HELOC debt has become the second largest segment 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. The government has become increasingly worried about the issue. If you’re wondering why Canadians have so much debt, this is one of the reasons.

Canadians Owe Over $300 Billion In Loans Secured By Real Estate

The balance of loans secured by residential real estate reached a new record high. The outstanding debt reached $300.93 billion in April, up 0.44% from a month before. The debt is 7.56% higher than it was the same month last year. This is a record, the first-time it has passed $300 billion, and the largest 12 month increase for April since 2017. Other than April 2017, no other 12 month increase over the past seven years comes close.

Total Loans Secured With Residential Real Estate

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

Source: Regulatory Filings, Better Dwelling.

Over $268 Billion of That Debt Is Personal Loans

Breaking that down, the vast majority of it is consumer debt for personal purposes. The balance in this segment represented $268.38 billion in April, up 0.49% from the month before. The debt is now 5.35% higher than it was during the same month last year. Huge growth, but much slower than it has been over the past couple of years. The balance is back to a new record high, after taking a brief dip.

Personal Loans Secured With Residential Real Estate

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

Source: Regulatory Filings, Better Dwelling.

Over $30 Billion In Real Estate Was Used To Secure Business Loans

Business loans secured by real estate moved lower, but were still much higher than last year. The outstanding balance reached $32.54 billion in April, down 0.02% from the month before. Even though it made a slight decline, April was still a massive 30.02% higher than the same month last year. This segment of debt hasn’t returned to the all-time high reached in 2017.

Business Loans Secured With Residential Real Estate

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

Source: Regulatory Filings, Better Dwelling.

The balance of loans secured by residential real estate reached a milestone in April. This is the very first time Canadians held over $300 billion in loans secured by their home equity. However, this segment does still appear to be seeing growth decelerate. This is clearest in the largest segment, personal debt – which is at a 24 month low for annual growth.

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