25 Nov 2013

Demand for consumer debt continues to grow moderately while the National 90 day-plus delinquency rate at record lows - Equifax Canada Reports

Toronto, ON, Monday, November 25, 2013 – Equifax Canada’s Q3 2013 National Consumer Credit Trends Report finds that total consumer debt balances (excluding mortgages) increased by 3.7 per cent year-over-year in Q3 2013 while average balance per consumer grew 2.3 per cent.


Balances grew fastest for automobiles (+7.9 per cent) on a year-over-year basis, while credit card balances showed the slowest growth at 2.6 per cent. Regina Malina, Director, Modeling and Analytics, Equifax Canada, commented that “Canadian vehicle sales continue to gain momentum, reflecting improving vehicle affordability and very attractive incentives. While this sector is very active, there is a need to continue monitoring its performance given possible changes to the current financial environment, including auto incentives and rate increases.”


While rising debt burdens are a concern, consumers continue to make their monthly payments.  The percentage of non-mortgage loans that were past due by 90 or more days fell to 1.13 per cent in the third quarter, a new record low.  The 90+ day national mortgage delinquency rate remains stable tending slightly downwards.


Despite the increased desire to borrow, average balances, limits and utilization rates of newly opened accounts were lower than in the same period last year.


Canadian consumer appetite for credit continues to increase. Credit inquiries were 5 per cent higher than in the same quarter last year.  Reflecting more robust economic conditions, inquiries jumped by over 7.0 per cent in Western provinces, but fell by nearly 1.0 per cent in Quebec.


While debt is increasing in all age groups, the 65+ age group is accumulating debt at the quickest rate. Seniors are nonetheless continuing to behave in a fiscally responsible manner based on their payment trend.   


Delinquency rates fell consistently across regions. Payment performance was strongest in Calgary and Edmonton with just under 1 per cent of non-mortgage loans delinquent by 90 days or more.  Toronto registered the worst performance among major cities with a delinquency rate of 1.5 per cent.


Cristian deRitis, Senior Director of Consumer Credit Economics at Moody’s Analytics, commented on the Equifax report by adding “credit trends among consumers remain strong as household consumption continues to support economic growth.  With interest rates expected to remain low throughout 2014 due to slow growth in the United States and Europe, performance should remain favourable.” “Longer term risks to the outlook include a sharp rise in interest rates leading to significant payment shocks, especially for mortgages,” deRitis added. “ A slowdown in export growth could also make it difficult for consumers to pay their bills, particularly in the West.”     

 
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