There was “very moderate growth in lines of credit and HELOCs likely due to housing market speculation and increased regulation,” reads the March Consumer Credit Trends Report released Tuesday. It pegs that rise at a meagre 3.3 per cent from $242.5 billion for March 2012 to $250.6 billion for last month.
The report is pointing the finger at new B20 regulations, but also a drop in property speculation as investors cool their jets in an iffy market.
HELOCs are frequently an integral part of the financing strategy of many first-time investors looking to take the equity in an existing property to fund the purchase of another.
That kind of activity has slowed right along with market sales, say analysts. They point to a dearth of small multifamily properties on the market. But there are other factors.
Under the new stricter B20 lending guidelines introduced last July, HELOC “A” clients are now limited to 65 per cent loan to values. Still, their brokers are still providing them access to 80-per cent LTVs by combining the HELOC portion with a fixed or variable portion if the HELOC product allows.
That may be so much fine print for some investors, now discouraged from using HELOCs to fund acquisitions.
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