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Consumers hitting pause on borrowing amidst missing more payments

Posted in Communications, Finance, Industry Trends, Newsworthy

Consumers hitting pause on borrowing amidst missing more payments

Equifax® Canada reported that the average Canadian consumer owed $72,500 in debt at the end of September, an increase of 2.1 percent compared to the same time last year. Non-mortgage debt was up 1.5 per cent to $23,800, a significant slowing from recent trends. In total, Canadians owed $1.966 trillion in consumer credit, a rise of 4.1 per cent from the same time last year.

Much of the increase in consumer debt came from mortgages, which was up 4.5 per cent to $1.320 trillion. Non-mortgage debt rose 3.2 per cent to $646B, the slowest year-over-year growth rate since early 2016.

“Consumers finally seem to be tempering their appetite for credit with slowing growth in non-mortgage debt in the last two quarters,” said Bill Johnston, Vice President of Data & Analytics at Equifax Canada. “That is a positive sign, as other indicators suggest more people are challenged with their current financial situation.”

Delinquency only part of the story

The most recent data indicates that more Canadians are missing their monthly payments. The 90-day-plus delinquency rate for non-mortgage credit rose 9.7 per cent to 1.15 per cent, the highest Q3 reading since 2012. British Columbia (14%), Ontario (12.4%) and Alberta (12%) had the most significant increase in delinquency. All age groups reported more missed payments after Seniors had become the first group to show the impact in late 2018.

Mortgage delinquencies have also been on the rise. The 90-day-plus delinquency rate for mortgages rose to 0.18 per cent, an increase of 6.7 per cent from last year. Ontario (17.6%) led the increases in mortgage delinquency followed by British Columbia (15.6%) and Alberta (14.8%). The most recent rise in mortgage delinquency extends the streak to four straight quarters.

“While the uptrend in delinquencies has been relatively modest, it has been masked by a significant increase in consumer bankruptcies,” added Mr. Johnston. “Consumer proposals, where a licensed insolvency trustee negotiates debt repayments, remain on a strong rising trend and that is coming at the expense of traditional delinquencies.”

Environment providing a breather

“The slower growth in non-mortgage credit is actually a positive sign, as consumers are starting to get their balance sheets in order,” concluded Johnston. “With the Bank of Canada on hold, this is a good opportunity for consumers to reset and prepare for future interest rate increases.”

Debt (excluding mortgages) & Delinquency Rates

Age 

Average Debt
(Q3 2019)

Average Debt Change
Year-over-Year
(Q3 2019 vs. Q3 2018)

Delinquency Rate
(Q3 2019)

Delinquency Rate Change
Year-over-Year
(Q3 2019 vs. Q3 2018)

18-25

$8,706

0.94%

1.64%

11.07%

26-35

$18,316

0.84%

1.65%

9.74%

36-45

$28,946

1.23%

1.32%

9.38%

46-55

$36,230

2.41%

0.99%

9.36%

56-65

$30,383

2.18%

0.88%

10.00%

65+

$16,606

2.54%

1.01%

8.66%

Canada

$23,806

1.45%

1.15%

9.65%

Major City Analysis – Debt (excluding mortgages) & Delinquency Rates

City

Average Debt
(Q3 2019)

Average Debt Change
Year-over-Year
(Q3 2019 vs. Q3 2018)

Delinquency Rate
(Q3 2019)

Delinquency Rate Change
Year-over-Year
(Q3 2019 vs. Q3 2018)

Calgary

$29,878

-0.53%

1.33%

11.94%

Edmonton

$28,444

-0.27%

1.56%

11.79%

Halifax

$23,622

-0.55%

1.54%

5.57%

Montreal

$18,009

1.66%

1.21%

0.42%

Ottawa

$22,843

1.11%

0.96%

7.41%

Toronto

$23,494

3.23%

1.23%

13.58%

Vancouver

$26,729

0.65%

0.78%

17.55%

St. John’s

$25,636

0.41%

1.77%

12.58%

Fort McMurray

$39,838

0.37%

1.91%

15.84%

Province Analysis – Debt (excluding mortgages) & Delinquency Rates & Bankruptcy Amount

 Province

Average Debt
(Q3 2019)

Average Debt Change
Year-over-Year
(Q3 2019 vs. Q3 2018)

Delinquency Rate
(Q3 2019)

Delinquency Rate Change
Year-over-Year
(Q32019 vs. Q3 2018)

Ontario

$24,397

2.44%

1.03%

12.41%

Quebec

$19,857

2.13%

1.00%

1.63%

Nova Scotia

$22,678

-0.29%

1.82%

7.12%

New Brunswick

$23,896

0.80%

1.86%

7.16%

PEI

$23,246

0.90%

1.34%

3%

Newfoundland

$24,111

0.15%

1.88%

12.17%

Eastern Region

$23,407

0.22%

1.81%

8.00%

Alberta

$29,182

-0.41%

1.48%

11.95%

Manitoba

$18,978

-0.31%

1.45%

10.45%

Saskatchewan

$24,937

-1.40%

1.57%

7.22%

British Columbia

$25,035

0.79%

0.93%

13.99%

Western Region

$25,889

0.01%

1.25%

11.69%

Canada

$23,806

1.45%

1.15%

9.65%

Data for the Equifax Canada 2019 Q3 National Consumer Credit Trends Report, including scores, is sourced from Equifax Canada, the repository of the majority of credit transactions that occur in Canada. There are over 25 million unique Equifax Canada consumer credit files. Transaction volumes for data are estimated at 105 million per month. Information provided in this report was adjusted to ensure that quarterly data reflects the results as of the last month of each quarter.