{"id":711636,"date":"2026-06-03T05:55:09","date_gmt":"2026-06-03T05:55:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/711636\/"},"modified":"2026-06-03T05:55:09","modified_gmt":"2026-06-03T05:55:09","slug":"as-household-debt-spikes-are-helocs-a-good-idea","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/711636\/","title":{"rendered":"As household debt spikes, are HELOCs a good idea?"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Houses in downtown Kelowna, B.C., on Saturday. HELOCs are as popular as ever \u2013 but emerging debt trends indicate Canadians may be relying on them too heavily.DARRYL DYCK\/The Canadian Press<\/p>\n

For homeowners who need extra cash, using the value within your property is an enticing option. And if history has shown anything, it\u2019s that Canadians love their home equity lines of credits, or HELOCs. <\/p>\n

First introduced as a credit product in the 1970s, HELOC use has exploded in the decades since<\/a>, particularly during the early 2000s, when their uptick was fuelled by low interest rates and rising home prices. HELOCs are attractive to homeowners because they offer borrowers an alternative to loans or credit cards, which come with higher interest rates. <\/p>\n

Today, HELOCs are as popular as ever \u2013 but emerging debt trends indicate Canadians may be relying on them too heavily. According to the monthly household credit liability report released by Statistics Canada<\/a>, national HELOC balances hit $180-billion in December, 2025, their highest since November, 2019. The most recent data (for March, 2026) shows the balance has remained elevated, at $179-billion. <\/p>\n

Adding to this is growing evidence that more Canadian homeowners are struggling to pay their mortgages. The Q1 Equifax Canada Market Pulse<\/a> report released on May 26 shows mortgage delinquency rates \u2013 which measure payments in arrears for 90 days or more \u2013 have spiked 32 per cent year-over-year. The average balance of these delinquent mortgages has also increased by 13.2 per cent compared with $355,500.<\/p>\n

With lower home prices and higher interest rates, how do HELOCs fit into financial plans?<\/a><\/p>\n

This paints a picture of an increasingly indebted borrower who may be tapping into their property\u2019s equity to make ends meet \u2013 and given a HELOC is secured against your home, that\u2019s a risky move. Because a HELOC is considered a revolving debt product \u2013 meaning you only need to pay interest on your balance until it\u2019s all due \u2013 it can be easy for debt to spiral out of control if homeowners aren\u2019t disciplined in their borrowing.<\/p>\n

Let\u2019s take a look at how HELOCs work. HELOCs are variable-rate loans that allow borrowers to access a portion of their equity for a set term called the draw period, which is typically between five to 10 years. During this time, you can pull cash out, repay it, and borrow it again as needed, up to your approved limit. HELOCs are generally available to those who\u2019ve paid off at least 20 per cent of their home\u2019s purchase price.<\/p>\n

HELOCs are also one of the cheapest ways to borrow money, at a variable rate typically priced at a lender\u2019s prime rate plus 50 to 100 basis points. (There are 100 basis points in a percentage point). <\/p>\n

Because these rates ebb and flow with prime rates, their pricing has followed the same trajectory as variable mortgage rates; back in 2021 and early 2022, when the Bank of Canada\u2019s benchmark lending rate was 0.25 per cent, homeowners could get a HELOC for as low as 2.45 per cent. <\/p>\n

Today, the lowest HELOC rates<\/a> in the Canadian market are about 200 basis points higher, at 4.95 per cent; but that\u2019s still considerably lower than the interest rate on a credit card. For example, let\u2019s say you\u2019ve got a HELOC balance of $70,000, the average as of September, 2025, according to Statscan<\/a>. At a rate of 4.95 per cent you\u2019d be paying $283 monthly to carry that debt if you made interest-only payments. <\/p>\n

But there are risks to using your property as an ATM, especially if interest rates rise, which makes it even pricier to carry that HELOC debt.<\/p>\n

Currently, the BoC has been sitting pat on its benchmark rate since October, 2025, but rising inflation pressures owing to the war in Iran and rising oil prices could prompt rate hikes by early 2027.<\/p>\n

Borrowers should also be aware that a HELOC doesn\u2019t stay open and revolving forever. When the draw period ends, you need to make monthly payments that cover both your principal and interest – not just interest-only payments.<\/p>\n

This repayment period can last between 10 to 20 years, and while borrowers always have the option to pay their HELOC off early at no penalty, those who\u2019ve left it to the end of the term can be squeezed by this higher monthly debt obligation. <\/p>\n

Carrying a HELOC, both while in the draw or in the repayment period, will also affect your overall debt ratios, meaning it can be tougher to qualify for other types of loans if lenders feel you\u2019re too leveraged.<\/p>\n

The bottom line \u2013 while tapping into your home equity can be a low-cost and convenient way to get cash, be aware that biting off more than you can chew on your mortgage comes with steep consequences, and HELOCs need to be used with prudence. Borrowers should have a clear plan to repay the funds, and understand the risks of potentially rising payments.<\/p>\n

Penelope Graham is the head of content at Ratehub.ca<\/a><\/p>\n

What do you want to know about mortgages?<\/p>\n

\nDo you have a mortgage question for our expert? Is a variable or fixed rate the best option? Does it make financial sense to refinance? Is it better to consult your bank or go to a mortgage broker? <\/p>\n

Submit your questions below and Ratehub’s Penelope Graham could answer it in an upcoming column.<\/p>\n

Penelope Graham is the head of content at Ratehub.ca<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Houses in downtown Kelowna, B.C., on Saturday. HELOCs are as popular as ever…\n","protected":false},"author":2,"featured_media":711637,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[901,888,902,879,877,903,45,49,48,876,895,896,891,878,875,46,549,295,894,887,914,880,881,893,889,890,884,904,885,909,910,912,907,911,905,908,882,898,899,714,897,906,865,61,900,892,886,883,913],"class_list":["post-711636","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-alberta","tag-arts-news","tag-bc","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","tag-business","tag-ca","tag-canada","tag-canada-news","tag-canada-sports","tag-canada-sports-news","tag-canada-trafficcanada-weather","tag-canadian-breaking-news","tag-canadian-news","tag-economy","tag-education","tag-environment","tag-federal-government","tag-foreign-news","tag-globe-and-mail","tag-globe-and-mail-breaking-news","tag-globe-and-mail-canada-news","tag-government","tag-life-news","tag-lifestyle","tag-local-news","tag-manitoba","tag-national-news","tag-new-brunswick","tag-newfoundland-and-labrador","tag-northwest-territories","tag-nova-scotia","tag-nunavut","tag-ontario","tag-pei","tag-photos","tag-political-news","tag-political-opinion","tag-politics","tag-politics-news","tag-quebec","tag-sports-news","tag-technology","tag-travel","tag-trudeau","tag-us-news","tag-world-news","tag-yukon"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/711636","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=711636"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/711636\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/711637"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=711636"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=711636"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=711636"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}