Equifax Canada reveals latest figures
A growing borrower population provided a major push to Canadian consumer debt, which totalled $2.36 trillion in Q3 (up by 7.3% annually), according to Equifax Canada.
This amounted to average non-mortgage debt per capita reaching $21,183, which was the highest reading since Q2 2020.
“Overall non-mortgage debt surpassed pre-pandemic levels and stands at $599.9 billion, up 5.3% from Q3 2021 and up 1.4% from Q3 2019,” Equifax said.
The volume of new-to-credit consumers, which Equifax defined as those who have less than one year of credit participation, grew by 37.4% year over year, and increased by 16.7% compared to levels seen during the third quarter of 2019.
“Factors including population growth from immigration combined with pent-up demand from the pandemic on things like vacations will be contributing to the overall rise in credit active individuals,” said Rebecca Oakes, vice president of advanced analytics at Equifax Canada.
However, Oakes warned that Canadian consumers “tend to rely on credit more during tough times. Part of the new credit uptake we’re seeing is likely from people who are feeling financial stress from sustained increased living costs and are taking on more debt as a result.”
Housing market deceleration continues
Equifax also reported that the pace of mortgage debt growth has significantly slowed down, with new mortgage volume falling by 22.7% annually. This was 14.6% lower than pre-pandemic levels.
“Higher interest rates not only impact consumers opening a new mortgage, but can also impact those reaching the end of agreed mortgage term periods who are looking to renew or refinance,” Oakes said. “More than 1.2 million mortgages are currently three to five years old, and 37% of these have an outstanding balance of more than $250,000.”
Oakes said that taking current trends into account, these consumers are at particular risk of higher payments if they are slated to renew their mortgages over the next 12 to 18 months.
