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Canadian consumers piled on their winter credit

Delinquency is on the rise too

TORONTO, June 11, 2019 (GLOBE NEWSWIRE) -- Equifax® Canada’s latest report on the health of the consumer credit market shows Canadians remained highly reliant on debt to start 2019. Average debt per Canadian consumer (including mortgages) reached $71,300 in the first quarter of 2019, an increase of 2.6 per cent over the same period last year. The proportion of Canadians posting higher credit balances compared to the previous year also reached a seasonal peak of 33.9 per cent, up significantly from 2018.

Total consumer debt including mortgages increased to $1.907 trillion in Q1, compared to $1.823 trillion in Q1 2018 (+4.3%). Mortgage growth has been slowing since late 2017, with total outstandings up 4 per cent to $1,278 trillion. Non mortgage debt was up 4.9 per cent compared to 2018, as longer terms on auto and bank loans have consumers paying down their balances slower.

“Consumers were opening fewer new credit products in early 2019, but they certainly weren’t curtailing the use of their existing credit,” said Bill Johnston, Vice President of Data & Analytics at Equifax Canada. “Loans are taking longer to pay down and credit card use is on the rise. The headline numbers for non-mortgage debt had been driven by population growth for the past 18 months, but it was increased usage that drove the rise in credit during the first quarter of this year.”

Delinquency marched higher

The 90-day-plus delinquency rate turned up in Q1 to 1.12% (+3.5%), as was expected after a small rise at the end of 2018. Seniors continued to lead the way higher with their 90-day-plus delinquency rate up 9.4 per cent compared to the same period in 2018. The sharpest increase in delinquency was noted in Newfoundland (10%), New Brunswick (7.8%) and Manitoba (6.1%). B.C. (5.4%) and Ontario (3.6%) reported the first significant increase in their delinquency in 5+ years.

Mortgage delinquency posted a second consecutive increase in Q1 2019, but remains at very low levels. The 90-day delinquency rate was up 4 per cent to 0.18 per cent. Manitoba led the way higher with a 21 per cent increase, while B.C. (14%) and Newfoundland (14%) also reported strong increases. There is evidence that the delinquency trend is gaining upward momentum.

“We continue to see signs of increasing strain for Canadian borrowers. The utilization of credit cards has been trending higher and gaining momentum,” added Johnston. “With more consumers growing their average debt, we expect to see further increases in delinquencies in the coming months.”

Mortgage markets felt an extended chill

The mortgage market has been slowing considerably over the past year. The value of new mortgages was down almost 12 per cent year-over-year in Q1, extending the trend to six straight quarters. Quebec is the only province not feeling the weight of the mortgage stress tests. British Columbia has been the most impacted with an extended downtrend.

The cumulative impact of the increased regulations has been pulling average mortgage values down. The average new mortgage in Q1 2019 was $268,480, a drop of 3.2 per cent from last year. Regulations have been most impactful in the expensive Vancouver and Toronto markets. Vancouver reported a 6.2 per cent drop in the average new mortgage value to $418,280. Toronto was down 1 per cent to $401,830. Affordable markets have been less impacted. The average new mortgage was up 3.6 per cent in Montreal and 2.5 per cent in Ottawa. Similarly, Hamilton (2.4%) and London (5.2%) have reported continued growth in mortgage amounts.

Debt (excluding mortgages) & Delinquency Rates

Age Average Debt
(Q1 2019)
Average Debt Change
Year-over-Year
(Q1 2019 vs. Q1 2018)
  Delinquency Rate
(Q1 2019)
  Delinquency Rate Change
Year-over-Year
(Q1 2019 vs. Q1 2018)
 
 18-25 $8,677  2.2%   1.68%   0.1%  
 26-35 $18,062  2.4%   1.61%   3.4%  
 36-45 $28,506  3.1%   1.28%   2.8%  
 46-55 $35,527  4.2%   0.94%   2.2%  
 56-65 $29,873  3.9%   0.84%   3.4%  
 65+ $16,288  4.2%   0.99%   9.4%  
 Canada $23,496  3.2%   1.12%   3.5%  

Major City Analysis – Debt (excluding mortgages) & Delinquency Rates

City Average Debt
(Q1 2019)
Average Debt Change
Year-over-Year
(Q1 2019 vs. Q1 2018)
  Delinquency Rate
(Q1 2019)
  Delinquency Rate Change
Year-over-Year
(Q1 2019 vs. Q1 2018)
 
 Calgary $29,905  2.1%   1.26%   8.0%  
 Edmonton $28,374  4.7%   1.49%   2.2%  
 Halifax $23,573  -0.1%   1.62%   9.6%  
 Montreal $17,796  2.6%   1.22%   1.0%  
 Ottawa $22,595  2.7%   0.93%   -1.6%  
 Toronto $23,047  5.0%   1.16%   3.6%  
 Vancouver $26,629  2.8%   0.74%   9.9%  
 St. John's $25,266  0.3%   1.70%   12.7%  
 Fort McMurray $39,007  3.3%   1.86%   8.0%  

Province Analysis - Debt (excluding mortgages) & Delinquency Rates & Bankruptcy Amount

Province Average Debt
(Q1 2019)
Average Debt Change

Year-over-Year
(Q1 2019 vs. Q1 2018)
  Delinquency Rate
(Q1 2019)
  Delinquency Rate Change

Year-over-Year
(Q12019 vs. Q1 2018)
 
 Ontario $24,032  4.5%   0.99%   3.6%  
 Quebec $19,410  2.2%   1.01%   0.9%  
 Nova Scotia $22,546  0.3%   1.82%   4.4%  
 New Brunswick $23,467  1.2%   1.84%   7.8%  
 PEI $23,043  1.8%   1.35%   2.7%  
 Newfoundland $23,778  0.6%   1.81%   10.0%  
 Eastern Region $23,134  0.7%   1.79%   6.6%  
 Alberta $29,117  3.4%   1.41%   4.3%  
 Manitoba $18,815  1.6%   1.42%   6.1%  
 Saskatchewan $24,853  0.1%   1.52%   2.3%  
 British Columbia $24,854  2.4%   0.89%   5.4%  
 Western Region $25,761  2.6%   1.20%   4.5%  
 Canada $23,496  3.2%   1.12%   3.5%  

About Equifax
Equifax is a global information solutions company that uses unique data, innovative analytics, technology and industry expertise to power organizations and individuals around the world by transforming knowledge into insights that help make more informed business and personal decisions. Headquartered in Atlanta, Ga., Equifax operates or has investments in 24 countries in North America, Central and South America, Europe and the Asia Pacific region. It is a member of Standard & Poor's (S&P) 500® Index, and its common stock is traded on the New York Stock Exchange (NYSE) under the symbol EFX. Equifax employs approximately 11,000 employees worldwide. For more information, visit Equifax.ca and follow the company’s news on Twitter and LinkedIn.

The information in this press release is published by Equifax Canada Co. © 2019 All rights reserved. This press release is for informational purposes only and is not legal advice and should not be used, or interpreted, as legal advice. The information is provided as is without any representation, warranty or guarantee of any kind, whether express or implied. Equifax will not under any circumstances be liable to you or to any other person for any loss or damage arising from, connected with, or relating to the use of this information by you or any other person. Users of this informational publication should consult with their own lawyer for legal advice.

Contact:

Andrew Findlater
SELECT Public Relations
afindlater@selectpr.ca
(416) 659-1197

Tom Carroll
Media Relations
Equifax Canada
MediaRelationsCanada@equifax.com
(416) 227-5290

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/ccb560bf-c22c-4b6b-8bc6-df48a95e179e