Home equity lines of credit have bene one of the main drivers of household spending in recent years, hitting $302 billion in June.
Compared to June 2018, that’s a 5.37% increase.
Household spending has also risen along with home prices—in 2016 and 2017, in particular—according to Bank of Canada research. In 2017, household spending rose 3.51% while housing prices surged 13.57%. Canadian homeowners have taken advantage of their appreciating assets, either taking out HELOCs or refinancing their mortgages.
In 2017, it was determined by researchers that Canadian homeowners took out $49b worth of HELOCs and refinanced their mortgages to the tune of $40b, spending it on big-ticket items like furniture and cars, but also renovating their homes.
By 2017’s conclusion,, the equity pulled out of homes is estimated to have grown consumer spending on durables and semi-durables by about 2% and 11% on home renovations, impacting GDP by 0.5%.
In 2018, however, home equity extraction to 0.1% on the GDP, which the Bank of Canada surmises could expose vulnerabilities in the economy, including housing price declines.