10 Feb 2014

Equifax Canada Reports Consumer Debt Grows to Over $1.4 Trillion

TORONTO, February 10, 2014 – Despite a consumer debt load now ticking up to $1.422 Trillion nationally, Equifax Canada’s Q4 2013 National Consumer Credit Trends Report also found that the national delinquency rate reached a new record low at 1.12 per cent.

“The growing debt is an important indicator of the state of consumer financial health, and should not be dismissed,” explained Regina Malina, Director, Modeling and Analytics, Equifax Canada in reference to the consumer debt.  “But for the most part, consumers and lenders continue to be responsible in how they’re using credit.  In short, monthly payments are being made.”

Total consumer debt reported to Equifax moved up by 4.5 per cent from $1.36 Trillion as of Q3 2013. On a debt classification basis, two levers pushing numbers higher are Installment Loans and Credit Card sectors with significant increases of 11.0 per cent, and 5.9 per cent year-over-year, respectively.

Cristian deRitis, Senior Director of Consumer Credit Economics at Moody’s Analytics, commented on the Equifax report adding “that the consumer debt certainly raises eye brows. It’s a number that seems to defy gravity.  Debt service ratios, however, are stable indicating that most households have adequate income to service their debts.”

Mr. deRitis further noted, “Consumer credit trends are expected to remain strong throughout the year as an expanding U.S. economy increases demand for Canadian exports.  Interest rates are expected to remain relatively low throughout 2014, rising gradually in 2015 and 2016 as both the Canadian and U.S. economies gather steam.  This transition period should allow consumers to adjust their spending habits while continuing to make their debt payments.”

On a regional basis, Quebec has the lowest delinquency rate (0.98 per cent) on non-mortgage loans, while the Eastern region has the highest rate (1.42 per cent). 

90 days or more Delinquency Rate               
Region       Q4 2012    Q1 2013    Q2 2013    Q3 2013    Q4 2013
                   
Ontario       1.37%       1.37%         1.35%        1.28%         1.23%
Quebec      0.97%       1.00%         0.99%        0.96%          0.98%
West          1.07%        1.08%         1.06%        1.00%         1.01%
East           1.47%        1.50%         1.51%        1.42%         1.42%
Canada     1.19%         1.20%         1.19%        1.13%         1.12%

Payment performance was strongest in Calgary and Edmonton with less than 1 per cent of loans delinquent by 90 days or more.  Toronto registered the worst performance among major cities with a delinquency rate of 1.5 per cent.

 
Continuing to look at major cities and average debt, Edmonton incurred the highest year-over-year increase of 5.3 per cent.  Also of note, the average debt in Vancouver decreased substantially by 4.4 per cent. 

Average Debt - % Change Year- Over-Year   
% Changes (Year- over-Year)    Q4 2012    Q1 2013    Q2 2013    Q3 2013    Q4 2013
Calgary                                       -1.4%        2.1%          3.6%         3.8%          1.9%
Edmonton                                   -0.2%        5.0%          6.4%         7.5%          5.3%
Vancouver                                   4.3%        3.2%          2.0%        -0.3%         -4.5%
Montreal                                      3.3%        3.5%          4.6%         4.1%           2.3%
Ottawa                                         3.1%        2.6%         4.2%          3.3%           2.1%
Toronto                                        1.2%        0.7%         2.4%          1.6%           0.0%
Halifax                                          3.7%        2.5%         3.3%          2.8%           3.0%