Consumers Headed to the Sidelines Early in March, as the Pandemic Shutdown Slowed Bankruptcies in Q1
June 16 2020 - 6:00AM
Equifax® Canada’s latest report on Canadian consumer credit
provides a view into the early impact of the COVID-19 shutdowns.
Average non-mortgage debt dropped 0.5 per cent in the first quarter
of 2020 reflecting the significant drop in consumer spending in
March. This is the first decline in average balances in more than a
decade.
“With stores and restaurants shut down, consumers were able to
cut back on their spending in March as retail sales numbers
indicated,” said Bill Johnston, Equifax Canada’s Vice President of
Data & Analytics. “The result was a plunge in credit card
spending that translated into much lower balances. That trend
gained momentum in April, with few signs that consumers are looking
to debt for support in the early days of the pandemic.”
In total, average debt per person rose to $73,030, an increase
of 2.4 per cent compared to the first quarter of 2019. Total
outstanding debt was up 4.3 per cent to $1.989 trillion dollars.
Despite the pandemic, mortgages continued to gain upward momentum,
rising 5.7 per cent compared to 2019. This growth reflects home
sales prior to the economic shutdown, as activity slowed
considerably by the end of March.
The impact of the pandemic has been most evident in the volume
of consumers looking for new credit. Inquiries from lenders dropped
significantly in mid-March and early April. This is a good
indicator of credit demand. The trend has been improving in recent
weeks, led by mortgage and auto financing.
“Our data showed the sudden drop in credit demand as the economy
shutdown in late March,” added Johnston. “Those industries more
dependent on physical retail locations were the most impacted, but
it appears the worst is behind us.”
Pandemic impact on delinquencies and
bankruptcies
The 90+ day delinquency rate (the percentage of credit users
that have missed 3+ payments) for non-mortgage debt delinquency
rate rose to 1.22 per cent (9%). British Columbia (+12.65%),
Ontario (12.33%) and Alberta (11.79%) were once again the highest
in this category. Overall, the younger borrowers have demonstrated
more stable delinquency rates in the early phase of the pandemic,
which may partly be reflected in the increased use of payment
deferrals.
“The delinquency trend rose again in Q1, but it was not a real
reflection of COVID,” added Johnston. “Bankruptcies finally slowed
and we know April was also very low as services shut down.
Unfortunately, that trend will likely not continue, as we expect
delinquencies and bankruptcies to rise in the latter part of the
year.”
Debt (excluding mortgages) & Delinquency
Rates
Age |
Average Debt (Q1 2020) |
Average Debt Change Year-over-Year
(Q1 2020 vs. Q1 2019) |
Delinquency Rate (Q1 2020) |
Delinquency Rate
Change Year-over-Year (Q1 2020 vs. Q1
2019) |
18-25 |
$8,588 |
-1.03% |
1.87% |
11.20% |
26-35 |
$17,896 |
-0.92% |
1.76% |
9.48% |
36-45 |
$28,321 |
-0.65% |
1.39% |
9.10% |
46-55 |
$35,818 |
0.82% |
1.04% |
9.56% |
56-65 |
$30,013 |
0.47% |
0.90% |
7.75% |
65+ |
$16,214 |
-0.45% |
1.06% |
7.18% |
Canada |
$23,386 |
-0.47% |
1.22% |
8.99% |
Major City Analysis – Debt (excluding
mortgages) & Delinquency Rates
City |
Average Debt (Q1 2020) |
Average Debt Change Year-over-Year
(Q1 2020 vs. Q1 2019) |
Delinquency Rate (Q1 2020) |
Delinquency Rate
Change Year-over-Year (Q1 2020 vs. Q1
2019) |
Calgary |
$29,316 |
-1.97% |
1.43% |
13.36% |
Edmonton |
$27,915 |
-1.62% |
1.65% |
10.90% |
Halifax |
$23,094 |
-2.03% |
1.54% |
-4.89% |
Montreal |
$17,512 |
-1.59% |
1.28% |
4.69% |
Ottawa |
$22,223 |
-1.65% |
1.03% |
10.22% |
Toronto |
$22,965 |
-0.35% |
1.31% |
12.69% |
Vancouver |
$26,190 |
-1.65% |
0.83% |
12.10% |
St. John's |
$25,089 |
-0.70% |
1.68% |
-1.00% |
Fort McMurray |
$39,488 |
1.23% |
2.01% |
7.89% |
Province Analysis - Debt (excluding mortgages)
& Delinquency Rates & Bankruptcy Amount
Province |
Average Debt (Q1 2020) |
Average Debt Change Year-over-Year
(Q1 2020 vs. Q1 2019) |
Delinquency Rate (Q1 2020) |
Delinquency Rate
Change Year-over-Year (Q1 2020 vs. Q1
2019) |
Ontario |
$24,043 |
0.05% |
1.11% |
12.33% |
Quebec |
$19,488 |
0.40% |
1.05% |
4.09% |
Nova Scotia |
$22,255 |
-1.29% |
1.78% |
-2.29% |
New
Brunswick |
$23,512 |
0.19% |
1.85% |
0.79% |
PEI |
$22,885 |
-0.69% |
1.20% |
-11% |
Newfoundland |
$23,614 |
-0.69% |
1.80% |
-0.53% |
Eastern
Region |
$22,982 |
-0.66% |
1.77% |
-1.34% |
Alberta |
$28,615 |
-1.72% |
1.58% |
11.79% |
Manitoba |
$18,449 |
-1.95% |
1.52% |
7.11% |
Saskatchewan |
$24,247 |
-2.44% |
1.64% |
7.31% |
British
Columbia |
$24,521 |
-1.34% |
1.00% |
12.65% |
Western
Region |
$25,339 |
-1.64% |
1.33% |
10.97% |
Canada |
$23,386 |
-0.47% |
1.22% |
8.99% |
* Based on Equifax data for Q1 2020
About EquifaxEquifax 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
LinkedIn.
Contact:
Andrew FindlaterSELECT Public
Relationsafindlater@selectpr.ca(647) 444-1197
Tom CarrollEquifax Canada, Media
RelationsMediaRelationsCanada@equifax.com (416) 227-5290
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