FCAC Gives Caution On Threat From HELOCs

The Financial Consumer Agency of Canada gave a warning that some homeowners may over-borrow as a result of the ease of use of HELOCs.

The agency has been thinking of using the home equity lines of credit and how banks make use of them in the latest account that was given, they also discovered that the lenders are increasing the number of readvanceable mortgages offered, merging together HELOC, other credit products and term mortgages. It mentioned that customers are not being given adequate information on how the products operate.­

Commissioner of FCAC, Lucie Tedesco said; “HELOC’s may lead Canadians to use their homes as ATMS, making it easier for them to borrow more than they can afford.” The agency summarised that there are one too many benefits being offered by HELOCs to consumers when it is used in a sensible manner, however, it is worried about some homeowners taking on fewer convenient debt due together with interest-only alternatives which means more debt being held for a longer time.