Young people are screwed by having to go into debt to buy overpriced homes from retirees who are selling (or people selling their starter home, to trade up.)
Retirees who aren't selling are using the equity in their overpriced homes to live lavishly. Their debt isn't a social problem, because they never intend to pay it down while they remain in their home. Instead, they will die or downsize, their home will be sold, and the HELOC will be paid off.
The former group is getting screwed, and is going heavily into debt because of land speculation. The latter group is living it up, and reaping the windfall. Unlike young people, they always have the option to sell, and move to a low-cost of living area that has no jobs.
It's the bank's problem, then, isn't it? They're predictably going to default. Why is their bank willing to buy equity in their home? It'd be like buying equity in a company that has declared its intent to shut down.
BoC staff add that, “Home equity extraction may also be concealing emerging financial distress if borrowers are taking equity out of their homes to manage other debt obligations or to finance their daily expenses because they lack other sources of funds.”
[1]https://www.ratespy.com/heloc-growth-isnt-what-everyone-thou...