Credit balances and participation posted robust recovery during the first quarter, said TransUnion
The first quarter of the year saw a sharp rise in Canadian credit activity as the economy strengthened, according to new data from TransUnion.
During Q1 2022, TransUnion’s Credit Industry Indicator saw an annual increase of 22 points, representing a return to pre-pandemic levels.
“Under strengthening economic fundamentals, credit participation grew and originations and balances increased as consumers and lenders became more active,” TransUnion said.
Average credit balances saw robust recovery, with credit cards up by 4.6% year over year and personal loan balances per consumer rising by 19.1%.
Credit participation posted a 2.1% annual increase in the first quarter, bringing the credit active population to approximately 29.7 million. The increase in this metric was driven by 12% growth in origination volume by lenders, along with lines of credit and credit card new openings driving volume up by 47.5% and 24.6% year over year, respectively.
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However, “rising inflation and interest rates continued to cause concern in the credit market, with consumers indicating these worries impacted purchasing behaviours,” TransUnion said.
“Rising inflation and interest rates [caused] concern of a payment shock, leading to a rise in defaults on debt obligations. 56% of Canadian consumers are very concerned about the inflation rate and associated impacts – 54% indicated they do not feel as optimistic about their household finances over the next 12 months,” it added.
