to a borrower based on two variables: 1) the value of the security property and 2) the borrower’s creditworthiness. This is expressed in a combined loan-to-value (CLTV) ratio. History of HELOCs United States HELOCs became very popular in the United States in the early 2000s, in part because banks were using ad campaigns to encourage customers to take out home loans, and because interest paid was typically deductible under federal and many state income tax laws. This effectively reduced the cost of borrowing funds and offered an attractive tax incentive over traditional methods of borrowing such as credit cards. Whereas most mortgages are offered at fixed rates, HELOCs are usually offered at variable rates due to the flexibility embedded into a 10-year draw period where interest rates may change. HELOC abuse is often cited as one cause of the subprime mortgage crisis in the United States. In 2008 major home equity lenders including Bank of America, Countrywide Financial, Citigroup, JP Morgan Chase, National City Mortgage, Washington Mutual and Wells Fargo began informing borrowers that their home equity lines of credit had been frozen, reduced, suspended, rescinded or restricted in some other manner. Falling housing prices have led to borrowers possessing reduced equity, which was perceived as an increased risk of foreclosure in the eyes of lenders. After Tax Cuts and Jobs Act of 2017, interest on a HELOC is no longer deductible unless the loan is used for substantial home improvement. After announcing they were no longer considering applications for HELOCs in 2020, JPMorgan Chase announced in May 2022 they were reconsidering it. Canada Similarly to the US, the HELOC market in Canada grew by 20% a year in the early 2000s, representing $35 billion in 2000 to approximately $186 billion in 20120. Looking at non-mortgage consumer debt, the share of HELOCs grew from 10% to 40% in that time. To put this breakthrough into perspective, credit cards consistently represented around 15% of the market share through this period. The main drivers for this evolving market where low-interest rates and sustained rising property prices. Both conditions were favourable to customers as the growing equity in their properties represented an excellent opportunity to secure larger and longer loans. In the aftermath of the 2008 crisis, demand for HELOCs stabilized and grew by an average of 2% yearly. This slower growth could be attributed to a lower demand, exceptionally low rates on