Equifax Canada has released its latest Market Pulse Consumer Credit Trends and Insights Report, revealing a significant increase in consumer debt levels across the country. The report highlights the growing financial pressures faced by Canadians, particularly younger consumers and homeowners, as they navigate rising interest rates, inflation, and unemployment.
According to the report, total consumer debt in Canada climbed to $2.5 trillion in the second quarter of 2024, marking a 4.2% increase from the same period last year. Credit card debt emerged as the primary driver of this surge, with outstanding balances reaching a staggering $122 billion, up 13.7% from Q2 2023. The average credit card balance per consumer now stands at $4,300, the highest level recorded since 2007.
Rebecca Oakes, Vice President of Advanced Analytics at Equifax Canada, commented on the findings, stating, “Inflation is stabilizing and interest rates are starting to reduce, which is good news for many consumers. Unfortunately, rising unemployment has offset some of the positives and is driving increased financial stress.”
The report also revealed a concerning trend in delinquency rates, particularly among younger consumers. One in 23 Canadians missed a payment on at least one credit product in Q2 2024, up from one in 25 a year ago. The non-mortgage balance delinquency rate reached 1.4%, the highest since 2011 and a 23.4% increase compared to Q2 2023. Consumers aged 26-35 were hit hardest, with a delinquency rate of 1.99%, up 21.6% from the previous year.
The auto loan sector is experiencing heightened risk, with delinquency rates for non-bank auto lenders reaching historic highs. The 90+ day balance delinquency rate for non-bank auto loans stood at 1%, up 26.8% from 12 months ago, while bank loan delinquencies rose to 1.16%, a 54.1% increase over the same period.
In the housing market, challenges persist for both homeowners renewing their mortgages and first-time buyers. Despite a 21.3% improvement in new mortgage originations from 2023 lows, they remain below typical second-quarter levels. The average mortgage loan amount increased by 6.1% year-over-year, with first-time homebuyers facing significant barriers due to high home prices and interest rates.
The report also highlighted a growing trend of multigenerational living arrangements, with nearly one in three Canadian households (29.2%) including adult children living with their parents, up from 26.7% a decade ago. This shift is particularly pronounced in Ontario, where 32.8% of households comprise multiple generations under one roof.
