The IOUs are piling up for Canadians. According to Equifax Canada’s Q3 2014 National Consumer Credit Trends Report, the amount of consumer debt owed by Canadians hit a new benchmark of $1.513 trillion in the third quarter, an increase of 4.5 per cent from the previous quarter and a 7.4 per cent jump from the same time last year. To put that all into perspective, 65.1 per cent of that trillion dollar tally is residential mortgage debt.
The average Canadian is $20,891 in the red, a figure that doesn’t take into account mortgage loans (though a surprising number of people don’t consider outstanding home and vehicle payments to really be debt). That amount represents at 2.7 per cent increase over the third quarter of 2013 and isn’t expect to drop in the near future thanks to the busy spending season ahead.
“Following a frenzied start to the festive shopping season with more to come in the countdown to Christmas, we can expect the consumer debt to rise even further,” said Regina Malina, senior director of decision insights at Equifax Canada.
What’s behind the debt pile on? The agency noted that the unemployment rate reached its lowest point in nearly six years last quarter, but mostly points to the Bank of Canada as the “main driver.” Keeping interest rates low for such a long time has led to more Canadians taking on debt over the past few years.
The country’s demand for new credit appears to be insatiable, especially in the West, where the debt level has been increasing every quarter since the second quarter of 2013. Canada-wide, it’s a similar story as there have been six consecutive quarterly increases as well.
Demand was up 1.1 per cent in Ontario, after a string of decreases starting from the fourth quarter of last year. In the East Coast, demand has been down for a year, while Quebec has experienced small ups and downs, with demand increasing 1 per cent this past quarter, after declining 0.5 per cent in Q2 and increasing 1.9 per cent in the first quarter of this year. The main drivers for demand are credit cards and auto credit inquiries.
Equifax did point out at least one positive stat. Consumer debt may be trending upward, but the national 90-plus day delinquency rate, which is now 1.1 per cent, hit its lowest level since 2008.