Consumer Debt is Up with Renewed Mortgage Activity
September 03 2020 - 6:00AM
Despite the economic impact of COVID-19, a strong recovery in the
Canadian housing market and a slower paydown of existing mortgages
helped push total consumer debt to 1.991 trillion dollars in the
second quarter, according to Equifax Canada’s most recent report on
consumer credit conditions. Consumer debt is up 2.8 per cent
compared to the same quarter in 2019.
Rising mortgage balances helped push the average debt per person
to $73,532, up 2.2 per cent compared to the second quarter of 2019.
Mortgages were supported by a bounceback in home sales from the
pandemic lows in March and April alongside increased refinancing
activity and higher average home prices. Non-mortgage debt
was down relative to 2019, as credit cards, auto loans and lines of
credit felt the weight of the economic shut down in most
regions.
“Mortgage activity has withstood the headwinds from COVID and
showed the earliest signs of recovery,” said Rebecca Oakes, AVP of
Advanced Analytics at Equifax Canada. “Other credit products began
to show greenshoots of a bounceback with credit card spending
starting to rise in June. Card spending for those not using a
payment deferral on their credit card were effectively back to
pre-COVID levels by the end of the quarter.”
The use of support mechanisms during the COVID-19 pandemic has
been widespread with more than three million consumers
utilizing a COVID-related payment accommodation at some point since
February. The 35 – 44 year-old age group have been the heaviest
users where 15.1 per cent have utilized some form of payment
deferral compared to only 5.7 per cent for seniors. Deferrals have
been dropping in recent weeks.
“Everyone’s situation is different. Some consumers who were
feeling financial stress prior to the pandemic are showing improved
credit behaviour since March and may be leveraging deferrals to
assist in paying down outstanding debts,” added Oakes. “There
remains a group that is feeling the financial stress of the
pandemic and is reporting more missed payments.”
Pandemic impact on delinquencies and
bankruptcies
The 90+ day delinquency rate (the percentage of balances where
credit users have missed 3+ payments) for non-mortgage debt was
1.24 per cent (10.6% up compared to Q2 2019). This continues a
trend from 2019 and does not measure the full weight of COVID.
Younger borrowers saw a drop in overall delinquency rate compared
to Q1, but this may be reflective of the increased usage of payment
deferrals and government-support benefits.
“Delinquency rates held up relatively well and do not reflect
the sharp rise in job losses thanks to the various support
mechanisms,” concluded Oakes. “One in five people utilizing
deferred payments were already financially stressed prior to the
start of the pandemic. Some of these consumers may find it harder
to recover as support mechanisms start to reduce.”
Debt (excluding mortgages) & Delinquency
Rates
Age |
Average Debt (Q2 2020) |
Average Debt ChangeYear-over-Year
(Q2 2020 vs. Q2 2019) |
Delinquency Rate (Q2 2020) |
Delinquency Rate
ChangeYear-over-Year (Q2 2020 vs. Q2
2019) |
18-25 |
$8,532 |
-0.94 |
% |
1.73 |
% |
2.35 |
% |
26-35 |
$17,596 |
-3.31 |
% |
1.73 |
% |
8.37 |
% |
36-45 |
$27,669 |
-3.90 |
% |
1.41 |
% |
10.85 |
% |
46-55 |
$35,135 |
-2.36 |
% |
1.08 |
% |
13.00 |
% |
56-65 |
$29,611 |
-2.15 |
% |
0.95 |
% |
11.86 |
% |
65+ |
$16,074 |
-2.87 |
% |
1.10 |
% |
12.11 |
% |
Canada |
$23,035 |
-3.00 |
% |
1.24 |
% |
10.62 |
% |
Major City Analysis – Debt (excluding
mortgages) & Delinquency Rates
City |
Average Debt (Q2 2020) |
Average Debt ChangeYear-over-Year
(Q2 2020 vs. Q2 2019) |
Delinquency Rate (Q2 2020) |
Delinquency Rate
ChangeYear-over-Year (Q2 2020 vs. Q2
2019) |
Calgary |
$28,890 |
-3.64 |
% |
1.46 |
% |
12.54 |
% |
Edmonton |
$27,571 |
-4.23 |
% |
1.72 |
% |
15.68 |
% |
Halifax |
$22,790 |
-3.69 |
% |
1.47 |
% |
-4.79 |
% |
Montreal |
$17,053 |
-5.07 |
% |
1.33 |
% |
11.73 |
% |
Ottawa |
$21,819 |
-4.66 |
% |
1.04 |
% |
13.43 |
% |
Toronto |
$22,651 |
-3.08 |
% |
1.34 |
% |
13.79 |
% |
Vancouver |
$25,940 |
-3.13 |
% |
0.86 |
% |
14.78 |
% |
St. John's |
$24,775 |
-2.67 |
% |
1.65 |
% |
-3.17 |
% |
Fort McMurray |
$39,142 |
-0.82 |
% |
2.09 |
% |
19.59 |
% |
Province Analysis - Debt (excluding mortgages)
& Delinquency Rates & Bankruptcy Amount
Province |
Average Debt (Q2 2020) |
Average Debt ChangeYear-over-Year
(Q2 2020 vs. Q2 2019) |
Delinquency Rate (Q2 2020) |
Delinquency Rate
ChangeYear-over-Year (Q2 2020 vs. Q2
2019) |
Ontario |
$23,663 |
-2.75 |
% |
1.13 |
% |
12.83 |
% |
Quebec |
$19,054 |
-3.14 |
% |
1.08 |
% |
9.58 |
% |
Nova Scotia |
$22,019 |
-2.67 |
% |
1.71 |
% |
-3.08 |
% |
New
Brunswick |
$23,324 |
-1.69 |
% |
1.80 |
% |
-1.46 |
% |
PEI |
$22,728 |
-2.08 |
% |
1.18 |
% |
-9.81 |
% |
Newfoundland |
$23,452 |
-1.95 |
% |
1.75 |
% |
-4.78 |
% |
Eastern
Region |
$22,782 |
-2.17 |
% |
1.71 |
% |
-3.28 |
% |
Alberta |
$28,261 |
-3.84 |
% |
1.63 |
% |
13.78 |
% |
Manitoba |
$18,243 |
-3.58 |
% |
1.50 |
% |
8.68 |
% |
Saskatchewan |
$23,984 |
-3.59 |
% |
1.61 |
% |
5.77 |
% |
British
Columbia |
$24,289 |
-2.96 |
% |
1.02 |
% |
15.03 |
% |
Western
Region |
$25,063 |
-3.42 |
% |
1.36 |
% |
12.63 |
% |
Canada |
$23,035 |
-3.00 |
% |
1.24 |
% |
10.62 |
% |
* Based on Equifax data for Q2 2020
About EquifaxAt Equifax (NYSE: EFX), we believe
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Relationsafindlater@selectpr.ca(647) 444-1197
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