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A combination of credit card activity and mortgage growth has pushed consumer debt in Canada comfortably over the $2 trillion-mark according to new data from Equifax Canada.
In its consumer credit trends and insights report issued today, the company stated that credit card spending and mortgages grew 7.8 per cent from Q3-2020 to Q3-2021, swelling overall consumer debt to $2.2 trillion.
New mortgage growth dropped this quarter and grew 7.7 per cent yearly, quite a contrast to the previous two quarters which reported over 20 per cent growth in new mortgages compared to pre-pandemic times.
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However, lower volume has not translated into lower loan amounts, Equifax Canada explained. The average loan amount jumped yet again by 18.3 per cent annually and 1.4 per cent quarter-to-quarter, with the average amount now at $360,000.
“Future interest rate movements will not only have an impact on consumers with variable interest rate products in the short term, but also could put pressure on some homebuyers with fixed interest mortgages in future years,” said Rebecca Oakes, assistant vice president of advanced analytics at Equifax Canada, in a press release.
“Consumers who took advantage of very low rates over the last 18 months on high value mortgages may feel pressure at the end of their term when they have to renew their mortgage at a much higher rate,” she added.
In Q3-2021, the 90-plus-day delinquency rates for mortgages dropped down 28.5 per cent from the same quarter last year. This was similar to non-mortgage delinquencies, which decreased 22.2 per cent from Q3-2020 to Q3-2021.
“Government support has been a boon for many financially stressed consumers who have managed to pay off their debts in time,” said Oakes. “However, we can likely expect a rise in delinquency in the coming months as government benefits came to an end in October for most consumers.”
When it comes to non-mortgage debt, the average monthly credit card spend per card holder is up by 3.9 per cent in Q3-2021 compared to Q3-2019. Equifax Canada says that this is driven by consumers under the age of 35, hinting that pent-up consumer demand, higher disposable incomes and reduced travel restrictions could be a factor.
Although spending is up, the average monthly payment per consumer has also grown. For every dollar spent, consumers made payments of $0.97 in the last quarter. Meanwhile, credit card balances remained 1.9 per cent lower in comparison to Q3-2020.
On an individual basis, average consumer debt — excluding mortgages — has reached $20,739, down 1.7 per cent from Q3-2020.