Tale as old as time: over-spending, under-saving, taking on debt to elevate ‘lifestyle’, tax-payer backed programs designed to enable bad habits, and a finance sector recommending destructive behaviors including the ‘miracle’ of Home Equity Lines of Credit (HELCOs) and ‘borrowing to invest’. See How Canadian homes became debt traps:
HELOCs have been around in Canada since the 1970s, but in the mid-1990s, lenders started marketing them to a wider swath of consumers. Between 2000 and 2010, HELOC balances soared from $35 billion to $186 billion, according to the Financial Consumer Agency of Canada, an average annual growth rate of 20 per cent.
The pace of growth has slowed since then, but balances still hit $211 billion last year…
It marks a fundamental shift in the way Canadians think about homeownership. “Whatever happened to getting to the end of a mortgage and owning your home?” says Gilbertson, the trustee in Vancouver. “It’s less about truly owning our homes today and more about having another revenue stream to fund our lifestyles.
Traditionally people reach a trigger moment when they can no longer pretend—a job loss, say, or divorce or illness. But increasingly bankruptcy counselors are noting a rise in clients filing simply because they have far surpassed the end of what their cash flow can service, even while they are still working, and before any major life shock.
“The insolvency business is cyclical, and we’re at least a year overdue for shedding blood in the system,” Scott Terrio, [an insolvency estate administrator] says. “If ever we were poised to hit that right on the head, it’s now.”