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The credit monitoring firm found that total Canadian consumer debt increased by 3.7 per cent year-over-year from $489 billion to $507.1 billion. The average balance per consumer grew by 2.3 per cent.
While the total debt load increased, the overall delinquency rate — non-mortgage loans that are over 90 days past due — dropped to 1.13 per cent, a record low and down from 1.22 per cent during the same period last year. In other words, Canadians are carrying more debt, but are also able to pay it off within a reasonable amount of time.
“People are gaining confidence and they see they can maintain more or less their lifestyle yet are more aware of the financial choices they’re making,” Regina Malina, Director of Modelling and Analytics at Equifax Canada, told the Canadian Press.
High household indebtedness is frequently cited as a source of concern by organizations monitoring the Canadian housing market. Both the OECD and Standard & Poor’s singled out the record high household debt levels as a risk to Canada’s economic health in separate reports published this month.
Commenting on the Equifax report, Cristian deRitis of Moody’s Analytics said “credit trends among consumers remain strong as household consumption continues to support economic growth. With interest rates expected to remain low throughout 2014 due to slow growth in the United States and Europe, performance should remain favourable.”
However, deRitis said a rise in interest rates was a longer term risk to the credit outlook and could lead to significant payment shocks, especially for mortgages.
Speaking of a potential interest rate hikes, read what the Bank of Canada’s Stephen Poloz had to say about the OECD’s recommendation that he raise interesting rates by the end of 2014.