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Canada’s total credit debt grew by 3.2% year-over-year (YoY) to a record $2.41 trillion during the first quarter of the year, according to TransUnion Canada’s Q2 2024 Credit Industry Insights Report, which is produced quarterly to map consumer credit market trends and health. Mortgage debt, comprising 74% of total debt, remains relatively healthy, underpinned by strong credit quality among mortgage holders and rising home values. Non-mortgage debt, including credit cards, loans, and lines of credit, continues to rise, reflective of higher consumption needs for Canadian consumers.

The TransUnion Credit Industry Indicator (CII) dropped slightly by one point from prior year to 104.5, due to a slowdown in credit supply coupled with a rise in delinquency rates, somewhat offset by higher balances and strong demand for credit.

Credit access – the overall number of credit-active consumers – is a key driver of this growth, up by 3.7% from prior year. As of Q2 2024, there are 32 million Canadians with at least one active credit product in their wallets, which represents approximately 92% of adult credit eligible Canadians. Younger Canadians are driving the bulk of increased participation, with Millennials (born 1980 to 1994) and Gen Z (born 1995 to 2010) driving $98 billion in growth of outstanding balances year-over-year. Gen Z consumers continue to be the fastest growing segment as more consumers from this group are becoming of credit-eligible age (18+) each year and entering the credit market for the very first time.

New credit openings grew YoY 10.4% (representing $77.9 billion in balances), driven by credit cards, with new credit card balances1 growing 7.5%. This is partly because of the continued influx of Gen Z consumers into the credit market, who typically open a credit card as their first credit product. New mortgage originations stalled, driving an increase in real estate supply, as elevated interest rates continue to leave some buyers on the sidelines.

More Consumers Face Payment StressAverage balances for major products held by Canadian consumers continued to grow during Q2 2024, with auto loan balances showing the highest growth (6.2% YoY) driven by higher ticket prices. In Q2 2024, average balances for credit cards grew 4.7% YoY, and installment loan and mortgage average balances grew 4.4% and 3.1%, respectively.

The growth in average credit card balances was primarily driven by consumers spending more on their credit cards, while paying down less on their monthly due payments. This indicates that specific segments of Canadians may be experiencing cash flow challenges while being increasingly reliant on credit cards. The number of Canadians only making minimum payments on their credit cards increased six basis points (bps) YoY to 1.2% of all credit card holders.

Higher outstanding balances combined with the higher cost of debt may have reduced financial flexibility for some consumers, making them more vulnerable to reduced disposable income, or the capacity to meet unexpected expenses. Increases in minimum payment due amounts were observed to have the largest impact to mortgages (13.5% YoY), followed by credit cards (10.6% YoY) and personal loans (10.5% YoY), with the growth in payment due amounts seen across all risk tiers2.

	Average Monthly Minimum Payment Due
		Q2 2023		Q2 2024		YoY Growth Rate
Mortgage		$2,071		$2,350		13.5%
Credit Cards		$104		$115		10.6%
Personal Loans		$76		$84		10.5%
Line of Credit		$445		$489		9.9%
Auto Finance		$640		$682		6.6%

“If the Bank of Canada continues to reduce interest rates, payment pressures may ease; however, lenders need to carefully monitor consumer behaviours, and predict and identify resilient versus vulnerable borrowers. Our analysis shows that a 50 bps decrease in mortgage interest rates from current levels could reduce mortgage payments by 12% or more for new or renewable mortgages openings in the coming months and help reduce the number of Canadians that are unable to make their monthly payment,” said Matthew Fabian, director of financial services research and consulting at TransUnion Canada.

Delinquencies Continue to Rise as the Cost of Living Pressure MountsOverall serious consumer-level delinquency rates (90 or more days past due on payments on any account) continued to rise, up 22 bps YoY to 1.74%, as the pressures of higher cost of living combined with high interest rates have impacted vulnerable consumer segments.

This phenomenon is especially evident among subprime borrowers, with serious delinquency among this group rising 131 bps to 15.7%. Some consumers with lower credit scores are struggling to keep up with their payments in the current economic climate.

Albertans had the highest serious delinquency observed in Canada at 2.18%. This is followed by consumers in Manitoba (2.03%) and New Brunswick (2.03%). Alberta also saw the highest YoY rise in delinquency, at 30 bps YoY, followed by Ontario.

Serious Consumer Delinquency Levels by Province
	Q22023		Q22024		BpsIncreaseYoY
Canada	1.52%		1.74%		22
AB	1.88%		2.18%		30
MB	1.78%		2.03%		25
NB	1.97%		2.03%		5
NS	1.88%		1.96%		8
SK	1.84%		1.96%		12
NL	1.82%		1.87%		5
ON	1.56%		1.83%		27
PEI	1.70%		1.74%		4
BC	1.53%		1.66%		12
QC	1.05%		1.24%		19

In addition to rising delinquencies, consumers are progressing from early stages (30 days past due payments) into later stages (90 days past due payments) of delinquency at a higher rate. A higher percentage of delinquent consumers moved or rolled forward from early stage to later stage of delinquencies – 12% in Q2 2024, compared to a 7% roll forward rate a year ago. Across products, when borrowers fail to make payments on balances and move into later stages of delinquency, the impacts can include increased interest charges, fees and penalties, along with reduction to credit scores.

“During these times of uncertainties, lenders need to monitor and predict portfolio health indicators by leveraging holistic consumer attributes. Our recent research studies have shown that by incorporating consumer-level trended data, we can help predict resilient consumers to drive smart growth, identify early warning signs of vulnerability to mitigate risk, and prioritize collection resources effectively to predict repayments. The Canadian credit economy would benefit from enabling consumers to continue leveraging credit for responsible behaviours,” said Fabian.

About TransUnion® (NYSE: TRU)

TransUnion is a global information and insights company with over 13,000 associates operating in more than 30 countries, including Canada, where we’re the credit bureau of choice for the financial services ecosystem and most of Canada’s largest banks. We make trust possible by ensuring each person is reliably represented in the marketplace. We do this by providing an actionable view of consumers, stewarded with care.

Through our acquisitions and technology investments we have developed innovative solutions that extend beyond our strong foundation in core credit into areas such as marketing, fraud, risk and advanced analytics. As a result, consumers and businesses can transact with confidence and achieve great things. We call this Information for Good® — and it leads to economic opportunity, great experiences and personal empowerment for millions of people around the world.

For more information visit: www.transunion.ca

For more information or to request an interview, contact:

Contact: Katie DuffyE-mail: katie.duffy@ketchum.comTelephone: +1 647-772-0969

1 New balances are defined as the sum of outstanding balances from credit cards that have opened within the quarter (Q1 2024)

2 According to TransUnion CreditVision® risk score: Subprime = 300-639; Near prime = 640-719; Prime = 720-759; Prime plus = 760-799; Super prime = 800+