Oh Canada! Now where have we heard about people borrowing heavily against their rising home values before?

by Chris
Canada is in pretty deep, so great going central bank of Canada – you’ve lured the bulk of your population into unwise borrowing practices!
 

Canadians Can’t Stop Using Their Homes as Piggy Banks
Feb 16, 2018
Canadians are borrowing against their houses at the fastest pace in more than five years, as home equity lines of credit emerge as a preferred means of accessing funds.
Heloc balances jumped 7.2 percent in December from a year earlier, the fastest annual growth since 2012, reaching a record C$230 billion ($184 billion), the Office of the Superintendent of Financial Institutions reported Thursday. All other types of consumer debt such as personal loans, credit card balances, car loans and overdrafts climbed just 3.2 percent over the same period, less than half the pace of heloc growth.
Borrowers can tap helocs for up to 65 percent of the value of their homes, and the funds are most commonly used for making renovations, investing and consolidating debt, according to a June 2017 report by the Financial Consumer Agency of Canada. “Houses are becoming piggy banks,” said Paul Gulberg, a Bloomberg Intelligence analyst. It’s “either greed based or need based.”


The rapid HELOC borrowing seen in 2006 and 2007 was a big red flag for me, and it should be for Canada as well.
But it’s no big deal for the banks…they make loans out of thin air and end up with your house if things go badly.
So the deal is, borrow and then work like a fiend to pay off the balance plus interest or lose your house.
Take one step back from that and it’s difficult to differentiate that from self-imposed slavery, where the opposite of slavery is having the free choice as to what you do with your time.

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