The annual increase was the slowest since 2016
Growth in Canadian home equity debt halted in May, according to the Office of the Superintendent of Financial Institutions (OSFI).
The national balance of home equity borrowing was at $305.78 billion in May, falling by 0.64% from April. And while the annual increase was at 1.53%, this was the most sluggish year-over-year growth since 2016.
Personal debt accounted for $268.88 billion of the May volume, representing a 0.6% monthly drop and a miniscule 0.12% annual gain.
This trend might derail the optimistic predictions made by some observers over the past few months.
In mid-June, HomeEquity Bank Executive Vice President Yvonne Ziomecki said that demand for mortgages drawing upon home equity will likely accelerate in September or October once payment deferral programs begin ceasing.
A significant portion of this demand will come from older business owners who suffered business closures and seniors who have previously bet on the stock market.
“These people need to find a way to get through three to six months and then figure out if they’re going to be able to stay in business or get a job,” Ziomecki told Global News.
“This demographic needs cash flow to live on,” said Sue Pimento, district vice president (central Canada) with HomeEquity Bank. “They are scared and have few choices or options. Then they watch their family members lose jobs or try to get by on reduced incomes and they, quite naturally, want to help. They need cash flow more than ever.”
