Even as current economic conditions shift, consumer appetite for new credit continues to increase and total consumer debt (including mortgages) now stands at $1.529 trillion in debt, according to Equifax Canada’s Q4 2014 National Consumer Credit Trends Report.
Comparatively, consumer debt (including mortgages) was $1.513 trillion in Q3 2014 and $1.42 trillion a year earlier: an increase of 1.1 per cent and 7.7 per cent mainly driven by installment and auto loans.
When compared to the same quarter last year national consumer demand for credit was driven mainly by credit cards. Bank and auto inquiries also increased compared to the same quarter last year.
“It’s a cautionary tale what we are currently seeing in the Canadian economy,” explained Regina Malina, senior director of decision insights at Equifax Canada. “The rapid decline in oil prices caught many by surprise. And, that’s the point – consumers and business owners need to be more vigilant. When economic change happens, it can happen very quickly and can challenge previously observed stability of key economic and credit indicators.”
The average debt held by Canadians, excluding mortgages, has increased by 2.9 per cent to $20,967. Another concern is the latest debt-to-income ratio figure from Statistics Canada, which is at an all-time high level of 163%.
Meanwhile, in spite of the growing concerns about consumer debt, the national 90+ delinquency rate in all regions and major cities has remained the same or decreased in most cases. In Q4 2014, the national 90+ delinquency rate reached 1.09%, the lowest level since 2008.
“Overall, delinquency and bankruptcy rates have been stable or decreasing over the last three years,” advised Malina. “These are some of the economic indicators that we’ll continue to watch closely over the remainder of this year. ”
The demand for credit remains strongest in the West, while there is noticeable activity in other regions as well.
Data for this report, including scores, are sourced from the Equifax Canada data warehouse, which stores the majority of credit transactions that occur in Canada. There are over 25 million unique consumer files. Transaction volumes for data are estimated at 105 million per month. Information provided in this report was adjusted to ensure that quarterly data reflects the results as of the last month of each quarter.