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A new TransUnion report shows a consistent rise in borrowing among Canadians in the second quarter as they contend with the higher cost of living.
While the number of consumers adding to their credit balances rose across the board, the report says the riskiest segment, or subprime borrowers, saw their balances rise by the most at 8.9 per cent year-over-year.
The report says higher average credit balances among consumers could be attributed to higher spending habits and elevated interest rates on variable-rate loans that are eating into household budgets.
Demand for new credit grew 17 per cent compared with last year, TransUnion said.
The combined pressure of inflation and higher interest rates has created a payment shock, according to Matthew Fabian, director of financial services research and consulting at TransUnion.
The report says total Canadian household debt reached $2.3 trillion in the second quarter, up 4.2 per cent compared with last year, largely driven by mortgage debt.
This report by The Canadian Press was first published Aug. 29, 2023.