‘New Normal’ Looms for Canadians with COVID-19 Deferral Programs Ending
March 04 2021 - 5:00AM
Increased mortgage activity and rising house prices in the fourth
quarter of 2020 pushed the overall consumer debt level to $2.07
trillion, up 1.5 per cent from last quarter and up 4.1 per cent
from Q4 2019, according to Equifax Canada’s most recent report on
consumer credit conditions.
Despite the increase in total debt, the average consumer debt
(excluding mortgages) dropped again this quarter to $23,043, which
is a year-over-year decrease of 3.0 per cent and a decline of 0.8
per cent compared to the previous quarter. The drop in consumer
debt is primarily due to credit card balance which has been
gradually declining since March last year due to reduced spending
and consumers paying down more of their balance on a monthly
basis.
“This reduction has been a positive consumer shift but that’s
not to say we are out of the woods in terms of recovery,” said
Rebecca Oakes, AVP of Advanced Analytics at Equifax Canada.
“Deferral programs are ending and pockets of financial stress are
starting to emerge for some consumers. Credit card spend is also
starting to rise again.”
Deferrals and delinquencies during the
pandemic
More than three million Canadians took advantage of credit
payment deferrals since the start of the pandemic and four out of
five of these have now completely exited the use of deferral
programs. Payment deferrals have been instrumental in preventing
consumers impacted by the pandemic from becoming delinquent on
their debt obligations. Even as consumers come out of deferral
programs, the 90+ day delinquency rate for non-mortgage products
stayed level in Q4 at 0.98 per cent while the same rate for
mortgages was 0.16 per cent. However, early-stage delinquency
(where an individual has missed one or two months of payments)
continued to rise during Q4. Mortgages saw a 31 per cent increase
in the 30+ day delinquency rate, while the 30+ day delinquency rate
on installment loans jumped by 76 per cent when compared to Q3
2020.
“The numbers suggest recovery will remain very uneven,” added
Oakes. “Quebec, for example, has shown early non-mortgage
delinquency continue to fall despite consumers leaving deferral
programs, whereas Alberta has the highest increase in consumers
missing mortgage payments. The support mechanisms across Canada
remain pivotal in the prevention of further increased delinquency
levels.”
First-time homebuyers, low interest rates and
lendingHigh demand for housing and lower interest rates
continued to fuel new mortgages with a 22.1 per cent year-over-year
volume growth in Q4 2020. The average mortgage loan amount rose by
14.4 per cent when compared to Q4 2019, marking the biggest
year-over-year jump since 2015. Higher loan amounts can also be
attributed to first-time homebuyers who saw higher than average
year over year volume growth of 26.9 per cent in Q4 2020.
“Rising prices in real estate hot spots have led to first-time
homebuyers taking on more mortgage debt than ever in order to get
their foot on the property ladder,” said Oakes. “For example, in
B.C. we saw average new mortgages for first-time buyers exceed
$470K during the last quarter yet they are not being deterred;
volumes were up more than 35 per cent compared to the same period
in 2019.”
New auto finance and installment loans trended down this quarter
with an 8.4 per cent and a 21.5 per cent year over year drop
respectively, meanwhile, new credit cards are slowly recovering
with a 10 per cent increase versus the last quarter.
Lenders are also showing some signs of caution as a result of
this uncertain period. Consumers are still being offered additional
credit, but on higher interest rate products like credit cards,
limits on newly-opened cards have been lower for the last two
quarters when compared to the same periods in 2019.
“During periods of economic uncertainty, consumers and lenders
may take proactive action to reduce variability in credit
commitments, switching or encouraging the use of lower interest
rate products,” said Oakes. “We are still in an uncertain period
with some isolated pockets of financial stress emerging. We will
continue to closely monitor this over the coming months.”
Debt (excluding mortgages) & Delinquency
Rates
Age |
Average Debt (Q4 2020) |
Average Debt Change
Year-over-Year (Q4 2020 vs. Q4
2019) |
Delinquency Rate(Q4 2020) |
Delinquency Rate Change
Year-over-Year (Q4 2020 vs. Q4
2019) |
18-25 |
$8,747 |
-1.13% |
1.29% |
-21.48% |
26-35 |
$17,868 |
-2.35% |
1.37% |
-20.04% |
36-45 |
$27,893 |
-3.36% |
1.10% |
-19.64% |
46-55 |
$35,252 |
-2.73% |
0.86% |
-16.27% |
56-65 |
$29,369 |
-3.13% |
0.77% |
-14.77% |
65+ |
$15,871 |
-3.76% |
0.91% |
-13.90% |
Canada |
$23,043 |
-3.02% |
0.98% |
-17.52% |
|
Major City Analysis – Debt (excluding
mortgages) & Delinquency Rates
City |
Average Debt (Q4 2020) |
Average Debt Change
Year-over-Year (Q4 2020 vs. Q4
2019) |
Delinquency Rate(Q4 2020) |
Delinquency Rate Change
Year-over-Year (Q4 2020 vs. Q4
2019) |
Calgary |
$28,829 |
-3.22% |
1.19% |
-13.60% |
Edmonton |
$27,319 |
-3.64% |
1.43% |
-10.57% |
Halifax |
$22,584 |
-4.16% |
1.17% |
-23.12% |
Montreal |
$17,103 |
-4.76% |
0.94% |
-27.25% |
Ottawa |
$21,891 |
-3.82% |
0.82% |
-17.23% |
Toronto |
$23,200 |
-1.24% |
1.09% |
-13.75% |
Vancouver |
$26,172 |
-1.59% |
0.69% |
-15.02% |
St. John's |
$25,155 |
-1.54% |
1.35% |
-22.27% |
Fort McMurray |
$39,717 |
0.11% |
1.69% |
-13.02% |
|
|
|
|
|
Province Analysis - Debt (excluding mortgages)
& Delinquency Rates
Province |
Average Debt (Q4 2020) |
Average Debt Change
Year-over-Year (Q4 2020 vs. Q4
2019) |
Delinquency Rate(Q4 2020) |
Delinquency Rate Change
Year-over-Year (Q4 2020 vs. Q4
2019) |
Ontario |
$23,883 |
-2.14% |
0.91% |
-15.31% |
Quebec |
$18,888 |
-4.76% |
0.75% |
-28.82% |
Nova Scotia |
$21,969 |
-2.98% |
1.37% |
-23.59% |
New Brunswick |
$23,217 |
-2.74% |
1.51% |
-18.52% |
PEI |
$23,070 |
-0.70% |
0.96% |
-21.91% |
Newfoundland |
$23,836 |
-0.99% |
1.40% |
-23.71% |
Eastern Region |
$22,832 |
-2.32% |
1.40% |
-21.89% |
Alberta |
$28,099 |
-3.36% |
1.36% |
-10.96% |
Manitoba |
$18,030 |
-4.68% |
1.21% |
-17.93% |
Saskatchewan |
$23,927 |
-3.48% |
1.32% |
-16.54% |
British Columbia |
$24,317 |
-2.15% |
0.83% |
-14.66% |
Western Region |
$24,988 |
-2.95% |
1.12% |
-13.60% |
Canada |
$23,043 |
-3.02% |
0.98% |
-17.52% |
|
|
* Based on Equifax data for Q4 2020
About EquifaxAt Equifax (NYSE: EFX), we believe
knowledge drives progress. As a global data, analytics, and
technology company, we play an essential role in the global economy
by helping financial institutions, companies, employees, and
government agencies make critical decisions with greater
confidence. Our unique blend of differentiated data, analytics, and
cloud technology drives insights to power decisions to move people
forward. Headquartered in Atlanta and supported by more than 11,000
employees worldwide, Equifax operates or has investments in 25
countries in North America, Central and South America, Europe, and
the Asia Pacific region. For more information,
visit Equifax.ca and follow the company’s news on
LinkedIn.
Contact: |
|
Andrew Findlater |
Tom Carroll |
SELECT Public Relations |
Equifax Canada Media Relations |
afindlater@selectpr.ca |
MediaRelationsCanada@equifax.com |
(647) 444-1197 |
|
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