Equifax Canada releases Q4 2022 credit card figures
Canadian credit card debt saw a precipitous increase in the fourth quarter of 2022, fuelled by interest rate hikes and elevated inflation, according to Equifax.
Consumer credit card balance spiked by 15.3% annually during Q4, pushing the total balance above $100 billion for the first time. Equifax cited increased activity among consumers 35 years and younger as the most significant driver of the increase.
The quarter also saw over 1.4 million new cards issued, Equifax said. The growing number of credit-active consumers stemmed from larger immigration volumes and higher costs of living.
“Canada has strong immigration targets with an aim to welcome 500,000 per year into the country by 2025,” said Rebecca Oakes, vice president of advanced analytics at Equifax Canada. “These individuals have credit needs, which adds to the growing demand for products.”
However, while mortgages still account for the majority of Canada’s consumer debt levels, rising interest rates and the cost of borrowing have significantly slowed down originations, which were down by 38.5% annually and down by 30.9% from the pre-pandemic level seen in Q4 2019.
“Hot housing markets such as Toronto and Vancouver saw the most significant movements, where average new mortgage amounts fell by $51k and $36k respectively and where volumes were down 44.3% and 52.3% compared to Q4 2021,” Equifax said.
Oakes warned that with more and more mortgages coming up for renewal, a spate of “payment shocks” for homeowners is now a very real danger.
“There are thousands of fixed-rate mortgages expected to be renewed in the next 12 months and this will likely lead to either an increase in the monthly mortgage payments for these consumers or a need to extend mortgage terms to maintain existing payment levels,” Oakes said.
Canada’s total consumer debt load in Q4 2022 grew by 6.2% year over year to reach $2.37 trillion, Equifax reported.
