Average debt went up 3.3% to $22,837 per person
Total debt held by Canadian consumers reached new highs last year – but delinquencies and bankruptcies went down, according to the latest figures from Equifax Canada.
Including mortgages, Canadian consumers owed $1.8trn at the end of December 2017 – that’s 6% higher from a year before, and 1.3% higher from the previous quarter. In particular, Equifax said the instalment loan, auto loan and mortgage sectors are showing significant increases of 10.3%, 6.5% and 6.2% year-over-year, respectively.
The average debt held by Canadians went up 3.3% to $22,837 per person.
Despite the high debt levels, data also showed that 46% of consumers decreased their debt during the fourth quarter of 2017, compared to 37% who increased their debt. Mortgage payments were generally on time as well, according to Regina Malina, senior director of decision insights. She attributed the improvement to low unemployment numbers and mortgage and auto finance interest rates which are still at “historically low and reasonable levels.”
“As the new mortgage rules begin to impact approval rates, there may be a shift in the profile of mortgage customers, and activity in the real estate market, but at this point most people are managing their payments,” Malina added.
Delinquency decreased across all age groups, but most noticeably among those under the age of 25. “Millennials have had the highest delinquency rates in terms of age, but we’ve seen a nine per cent reduction in their delinquency rate from a year ago,” Malina said. “Their overall debt has continued to increase, but they seem to be handling their payments better. This situation stresses the importance of financial literacy of younger Canadians. Once again, however, the debt of older Canadians also continues to rise perhaps suggesting Millennials are getting some help.”
