Results of a recent survey show that debt among subprime customers is mounting relative to other types of consumers
Canadian subprime consumers with good credit ratings continue to pay their obligations faithfully, while those with bad ratings are experiencing mounting debt, according to the results of a comprehensive study released last month.
The survey conducted by credit rating agency TransUnion revealed that as of Q1 2016, the average credit card balance per user increased by 5.7 per cent on a year-over-year basis to $6,601, as reported by Garry Marr for the Financial Post.
Meanwhile, credit card debt grew by 2.6 per cent to $6,260 in the same period.
“The story on the debt front is that average balances haven’t moved much, if you consider all Canadians together,” TransUnion director of research and analysis (Canada) Jason Wang stated in a news release.
“But once we segment by risk tiers, we find a gradual shift where subprime consumers are increasing their share of the debt load relative to the low-risk population,” he added. “Although subprime consumers do not make up the bulk of Canadian credit users, we are going to keep a close eye on this trend.”
A related phenomenon is the increase in 90-day delinquencies, which shot up to 2.52 per cent nationwide during the first quarter of the year. In the same period, this number increased to 3.04 per cent in Saskatchewan and to 2.8 per cent in Alberta, while it fell to 1.42 per cent in B.C. and to 0.8 per cent in Ontario.
“We continue to see material delinquency increases in the oil provinces and we suspect it will continue over the next few quarters,” Wang warned.
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The survey conducted by credit rating agency TransUnion revealed that as of Q1 2016, the average credit card balance per user increased by 5.7 per cent on a year-over-year basis to $6,601, as reported by Garry Marr for the Financial Post.
Meanwhile, credit card debt grew by 2.6 per cent to $6,260 in the same period.
“The story on the debt front is that average balances haven’t moved much, if you consider all Canadians together,” TransUnion director of research and analysis (Canada) Jason Wang stated in a news release.
“But once we segment by risk tiers, we find a gradual shift where subprime consumers are increasing their share of the debt load relative to the low-risk population,” he added. “Although subprime consumers do not make up the bulk of Canadian credit users, we are going to keep a close eye on this trend.”
A related phenomenon is the increase in 90-day delinquencies, which shot up to 2.52 per cent nationwide during the first quarter of the year. In the same period, this number increased to 3.04 per cent in Saskatchewan and to 2.8 per cent in Alberta, while it fell to 1.42 per cent in B.C. and to 0.8 per cent in Ontario.
“We continue to see material delinquency increases in the oil provinces and we suspect it will continue over the next few quarters,” Wang warned.
Related Stories:
Low interest rates inflaming debt and price growth – OECD
What brokers need to know about the next era of homebuyers
