Eric Shackleton, THE CANADIAN PRESS

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TORONTO - More Canadians than ever are seeking financial relief through debt counselling agencies after maxing out the equity in their homes, or putting off things like home renovations in an effort to shore up sagging finances as they worry about the U.S. economic meltdown or face soaring costs for gasoline, food and other necessities, say experts.

At the same time, consumer confidence is being undermined as money gets tighter, the value of people's homes slips, more jobs are cut in the economy, volatile markets take a toll on investments, and potential home buyers become more cautious.

"We are definitely seeing an increase in people that are contacting us that have basically exhausted all (financing) options with their bank," Amanda Miller, sales manager with DebtManagers Canada, said in an interview.

"They are not able to get loans anymore . . . (and) are not able to refinance their homes, after maxing out the equity in their properties."

DebtManagers, formerly called National Credit Counsellors of Canada, helps people to become debt free and avoid bankruptcy.

Miller could not put a figure on the percentage of the increase in counselling service visits, saying only that it is "not as dramatic" as in the United States, where the economy is in recession and the housing sector is slumping badly.

"Out of every 10 clients maybe one or two are referred to a bankruptcy trustee," she said.

Dolly Datta, 59, who lives in Mississauga, a community west of Toronto, said she and her husband Rupak, have had to cut down on a lot things they used to buy because prices have jumped for many necessities.

"We just made a budget," she said. "That's all we stick to."

The Dattas have had to put off big ticket items for the time being, such as renovating the house and buying extra furniture.

"Something breaks down. You can't replace it. Things can wait," she said.

Canadian consumers are also cutting back on restaurant spending, taking more meals at home, and shifting their coffee consumption away cafes to home brewing, RBC Capital Markets said in a note to clients on Tuesday.

Canadians have become increasingly concerned about the economic outlook, given the wild swings in financial markets as the Wall Street credit crunch spills around the world.

Uncertainty in the marketplace has soared since the collapse of several U.S. investment banks, the bailout of U.S. mortgage giants Freddie Mac and Fannie Mae and insurance giant AIG.

With credit tightening, experts predict further drops in U.S. consumer confidence, which will hurt sales of autos, homes and other big ticket items, ultimately affecting employment at lumber mills and auto plants in Canada.

Many communities, such as Windsor and Oshawa in Ontario where the automotive industry is a major employer and Prince George and Williams Lake in B.C. where the ailing forestry industry has shed many jobs, have been devastated by the squeeze on lumber and vehicle exports to the U.S. in the last year or so.

This increased uncertainty is reflected in the housing market, said Adrienne Warren, an economist with Scotiabank.

"There are fewer buyers now than there were a year ago ... on average."

High gas prices, slowing job growth, an edging up in mortgage rates, a cooling off in the economy have all combined, she said, to produce an "easing back" in consumer sentiment.

Consumers over at the least the next six months are likely to put off the purchase of big ticket items such as fridges and stoves, she said.

"They don't have the same purchasing power that they may have had six months to a year ago, with high gas, food and transportation prices," said Warren.

There is "a little bit more caution" among home buyers, said Dianne Usher, vice-president and division manager of Royal LePage J&D Division in Toronto.

"People are doing more research, not moving quite as quickly, (houses are) staying on the market a little longer," she said.

On Tuesday, the Canadian Real Estate Association reported that the number of properties listed via the Multiple Listings System fell on a seasonally adjusted basis by 5.4 per cent in August from July to 74,993 units.

"With price gains diminishing and homebuyers taking more time to shop, the number of MLS listings may continue to ease" in the months ahead, said CREA chief economist Gregory Klump.

Derek Nighbor, senior vice-president of national affairs for the Retail Council of Canada, said "we've seen a bit of softening from the beginning of the year" in retail sales.

But "if you compare sales to this time last year, things are still moving in a positive direction," he said.

Statistics Canada reported that in July, the most recent month for which statistics are available, retail sales rose five per cent across the country from last year.

That's "pretty good," said Nighbor. "There are a lot of retailers in the United States who would pray for anything positive at this point."

Nighbor said most people these days are spending "the bulk of their money" on things like gas for their cars. But "we've aslo seen an increase of nine per cent in home electronics."

This suggests, he said, that people might be "thinking more about staying in and doing things, instead of spending money out."

While credit in Canada has not tightened that much yet, said Alex Haditaghi, CEO of Mortgagebrokers.com, "we have bit of a challenge at the present time" in the mortgage market.

But "that only probably affects about five per cent of the people" and mainly in small markets, he said.

"People are worried about spending money. But we're finding that people have got money to spend."

In the meantime, the housing market is turning in favour of buyers, and prices are slipping, further weakening the financial position of homeowners who have used up all the equity in their homes.

This dip in prices has come about in part because of a cooling off in demand among both first time buyers and those wishing to move up to a bigger property, said Warren.

"If you're looking at consolidating debt through your home, it's more difficult to take money out of the home when house prices are flatter or even possibly falling," she said.

Over the last few years, said Haditaghi, "you could practically get 98 per cent to 100 per cent of what you were looking for" when you sold a home.

Sometimes, "you had multiple offers, where people would get 120 per cent of what they were asking for."

Now, said Haditaghi, "people are not getting as much for their properties."