What rising mortgage rates mean for your HELOC

But that may soon prove to be a real liability, experts say. That’s because HELOCs are variable-rate loans, meaning when the central bank increases its overnight rate, lenders follow suit.The effect for HELOC holders will be almost instantaneous, says Robert Hogue, senior economist with RBC Economics in Toronto.

“In terms of cash flow … for many people, they may not see that big a difference,” says Hogue. “It’s just that it’s gonna take longer for them to pay back their loan.” Ambrozewicz ran the math on what an increase will mean for consumers. For every $100,000 they owe, an increase of half a per cent will translate into $42 more a month in interest, or $500 at the end of the year.

With the BoC indicating there are more hikes ahead, the incremental increases could start to take a toll on anyone whose budget is already maxed out.

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