![\"\"](\"https:\/\/www.livabl.com\/articles\/wp-content\/uploads\/2019\/07\/canadian-house-atm.jpg\")
<\/a><\/p>\nImage:\u00a0Peggy und Marco Lachmann-Anke<\/a>\/Pixabay<\/a><\/em><\/p>\n They\u2019re a popular tool most often used to fund home renovations, especially in recent years, but Canadians may be cooling to borrowing via home equity lines of credit (HELOC).<\/p>\n \u201cHELOC loans fell month-on-month for the first time since May 2016 as they remain on a slowing trajectory following strong increases through 2017 and 2018,\u201d write Scotiabank\u2019s Alena Bystrova, a research analyst, and Juan Manuel Herrera, an economist, in a recent report<\/a>.<\/p>\n In a follow-up email, Herrera tells Livabl, \u201cThe most recent slowdown would suggest that fewer Canadians are opening HELOCs and\/or those who have a line of credit on their home have chosen to hold back on borrowing against their property.\u201d<\/p>\n He adds the bank does not have data on the total number of HELOCs accounts open nationally.<\/p>\n\n Herrera suggests the Canadian housing market slowdown that came after years of strong price growth might have dampened HELOC demand.<\/p>\n \u201cHELOC loans may have declined as homeowners who consider spending on renovations in their homes have a reduced incentive to do so now that home prices have seen practically no increase nationwide since late-2018\u2026 Any additional money spent on a home would not provide the financial returns that it could have resulted in two years ago,\u201d he says.<\/p>\n \u201cThe Bank of Canada\u2019s rate-hiking cycle through 2017-18 also led to an increase in consumer interest rates, which acts as a deterrent for people taking out additional loans,\u201d Herrera continues.<\/p>\n Rapidly rising home prices could have encouraged more Canadians to take on HELOCs as they tried to get top dollar for their homes.<\/p>\n In part a result of the decline, household credit growth slowed to a month-over-month rate of 4.4 percent, shy of April\u2019s 4.9-percent gain despite mortgage growth tracking at an impressive 6.3 percent.<\/p>\n That\u2019s the biggest monthly increase since November 2018, when homebuyers were rushing to purchase properties before stress testing for uninsured mortgages took effect the following January.<\/p>\n Scotiabank researchers note that HELOCs are still a small piece of the consumer-credit pie, which also includes mortgages and other loans.<\/p>\n \u201cDespite the rapid acceleration of HELOC borrowing since early-2016, these loans have gathered \u2018only\u2019 an additional 2.4 ppts (percentage points) share of total consumer credit with chartered banks over the last three years,\u201d write Bystrova and Herrera.<\/p>\n Just 14 percent of Canadian households have a HELOC.<\/p>\n Roughly half of all HELOCs in 2018 went towards financing renovations, and the next most common use is debt consolidation, which accounts for a 22-percent share. Day-to-day expenses and vehicle purchases represent a 19-percent share of HELOCs.<\/p>\n