Pattie Lovett-Reid

Chief Financial Commentator, CTV

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For now, Canadian consumers appear to have taken a bit of a spending holiday. Now to be fair, they have not shut their wallets completely, but after such a robust first-quarter spending bonanza, the second-quarter numbers seem more in line with what you might expect as the economy slows and the job market is a little less certain. 

Here are the facts, according to Equifax Canada's latest report on consumer credit:

• ​​​Total debt per consumer rose by 1.9 per cent to $71,970, compared with robust growth of 2.6 per cent in the first quarter​
• Mortgage debt continues to decelerate with a 1.8 per cent​ increase to $48,225 per consumer.
• Non-mortgage debt rose by two per cent to $23,745, far better than the three-per-cent growth rate in the previous quarter
• Delinquency is up but here's some context: It is still really low and not alarming. Ninety-day past due payments stood at 1.12 per cent, with Quebec as the only province to show improvement. Newfoundland led the charge higher with an 11 per cent delinquency rate, followed by Alberta (7.9 per cent) and Ontario (7.8 per cent). 
• While delinquencies are watched closely, typically they move in conjunction with bankruptcies. However, this correlation broke down in mid-2018, with bankruptcy outpacing delinquencies significantly. 

If I have a concern around mounting debt it tends to focus squarely on the boomer cohort. In a perfect world, as you near or enter retirement you have "retired" your debt and that doesn't seem to be the case. The average delinquency rate change is highest among those over the age of 56, rising 6.71 per cent for those between 56 and 65 and 7.13 per cent for Canadians over the age of 65.

The findings by Equifax come amid a recent rise in reverse mortgages as senior Canadians struggle to make ends meet while trying to maintain a lifestyle in their home that may be beyond their means. 

With this in mind, it may be time to take stock of where you are at and ask yourself some tough questions:

1. Can you afford to make larger payments on your outstanding debt but choose not too?

2. Can you get rid of the most expensive debt first - not the one with the biggest balance but the one with the highest rate?

3. Do you have a spending problem and are you inflicting lifestyle inflation upon yourself?

4. Have you explored a consolidation loan to lower your rates and simplify the repayment process?

5. Have you asked for credit relief?

6. Have you explored a side hustle, aggressively reviewed your budget or cut discretionary spending to find extra cash?

7. Have you talked to your bank or reached out to a not-for-profit credit counselling agency and asked for help to build a debt repayment plan? 

The Bank of Canada gave Canadians a break - yet again - by leaving rates on hold. But as I have said before, and I will say again, the day of reckoning will come. 

Now is not the time to take on more debt. The prudent Canadian recognizes that at some point, everyone goes home from the party and rates will head higher, too.