Canadians are taking on debt, but they continue to manage it well.
According to Equifax Canada’s 2017 Q2 National Consumer Credit Trends Report, debt levels increased by 6.2 per cent year-over-year. Once you strip out mortgages, Ontario was the leader of the pack with the average consumer debt increasing 5.1 per cent – the highest in the country – while delinquency levels in the province decreased 8.1 per cent. Clearly, the desire is there to consume more debt but the ability to pay it back remains stable.
There has been a concern in recent quarters among provinces impacted by lower oil prices such as Alberta and Saskatchewan. The fear may be unfounded as debt levels increased at the lowest rate in the country – Saskatchewan up 1.7 per cent and Alberta up 1.8 per cent – with Alberta’s delinquency rate increasing by just 1.7 per cent compared to a year ago, following two years of larger quarterly increases.
From an age perspective, the good news continues with a retreat in delinquency for every age group from millennials (-5.3 per cent) to seniors (-7.3 per cent). In fact, the 65+ age group had the highest increase to its average debt 4.3 per cent, while millennials had the lowest increase of 1.7 per cent.
Bottom line, the average consumer debt, excluding mortgages, has increased to $22,595 and the overall delinquency rate lowered to 1.09. On a debt classification basis, installment loans increased 8.7 per cent, mortgages were up 6.9 per cent and auto loans were higher by 5.9 per cent.
Interesting to note – there is an interest rate announcement by the Bank of Canada on Wednesday and the odds are rates could be heading higher yet again. In this low interest rate environment, there are many living close to the margin, and in some cases paycheque to paycheque.
We'll be watching to see if the trend – lower delinquency levels – continues as our debt levels continue to mount.