HELOC debt rises in Canada amid affordability crisis, experts warn of home loss risk

As financial pressures mount for Canadians, a growing number are turning to home equity lines of credit (HELOCs) for relief. However, experts caution that this can be a risky strategy, potentially leading to the loss of homes.

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HELOCs might be cheaper than credit cards, but they require serious collateral: your home.

Recent data reveals a significant portion of the population is already stretched thin. An Ipsos poll found that 61% of Canadians have over half their income committed to expenses before it even arrives, with 32% having most of their paycheque allocated. This financial strain has continued into the first half of 2026, prompting many to seek additional borrowing options.

While HELOCs may offer lower interest rates than credit cards, they put a home directly at risk. "HELOCs might be cheaper than credit cards, but they require serious collateral: your home," warned mortgage expert Clay Jarvis. He added, "If your financial situation worsens and you can no longer make HELOC payments, you could lose your house."

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If your financial situation worsens and you can no longer make HELOC payments, you could lose your house.

Data from Equifax, presented by the Canada Mortgage and Housing Corporation (CMHC), shows a notable increase in HELOC balances. In the final three months of 2025, Canadians held $230.9 billion in outstanding HELOCs, a rise of over five percent from the previous year. This trend coincides with consumer insolvencies reaching their highest point since 2009.

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As budgets are getting tighter and things are getting more expensive, people may not have that same safety net that they already had previously in their chequing accounts and their banking accounts, and they may be dipping into that home equity line of savings because they’re already kind of stretched thin.

Mortgage broker Leah Zlatkin noted that as budgets tighten, people may deplete their savings and tap into home equity. She advised against using HELOCs for day-to-day expenses due to inflationary pressures. This comes as mortgage debt approaches $2 trillion, with millions of households facing mortgage renewals in the coming years.

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Because of the inflationary pressures in day-to-day life, having a home equity line of credit, it’s not really what you should be using it for.