Residential Market Commentary - New Heights For Consumer Debt

Consumer debt in Canada has hit a new, record high topping $2.6 trillion in the second quarter. 

Credit monitoring firms Equifax and TransUnion put the total at $2.68 trillion and $2.64 trillion respectively.  Both companies report an increase in the number of Canadians falling behind on their payments. 

TransUnion says debt levels grew faster than the number of people using credit, with existing borrowers carrying bigger balances compared to the same period a year ago. Equifax notes that Q2 consumer debt increased 1.3% from Q1, and is up 4.18% year-over-year. 

According to TransUnion borrowing growth was strongest among consumers with the highest and lowest credit profiles. It suggests some households have increased borrowing from a position of financial strength while others may be leaning on credit to support normal, daily expenses. 

TransUnion also reports that the most significant increase in consumers who are 90+ days overdue on payments occurred in Alberta, Saskatchewan and Ontario. Equifax notes that the number of Ontario mortgage holders who are 90+ days overdue has increased in every quarter for the past four years. 

Mortgage delinquency rates remain low across Canada but TransUnion notes that delinquencies of 60+ days did edge higher particularly in the more expensive markets where borrowers tend to have larger mortgage balances and, therefore, face greater affordability pressures and more exposure to payment shocks. 

- First National Financial LP