Non-mortgage debt hits a record $21,696 in first quarter, but delinquency rates down

By: Dominic Licorish on June 8, 2017

TransUnion said Thursday that the average consumer non-mortgage debt of Canadians shot up up 1.9% to $21,696 in the first quarter, though delinquency rates in the country have dropped.

The report only looks at non-mortgage debt and shows Canadians continue to spend confidently on cars, credit cards, education (student loans), and more. Yet despite the rising debt level, the report finds Canadians are doing a good job of servicing their debt, with delinquency rates of 90 days or more falling 1.45% in the quarter.

The drop in the delinquency rate is a sign of improvement over what we saw in Q3 of 2016.

“The consumer credit market in Canada is expanding, and is doing so in a healthy manner,” said Matt Fabian, director of research and consulting for TransUnion Canada.

Other findings in the report include specific breakdowns for major cities across the country. Montrealers have the least consumer debt of any Canadian city, with an average of $15,876. Meanwhile, Toronto sits close to the average at $20,918. Canada’s largest city is notable, however, for having the biggest drop in delinquency rates with a -7.55% change. It’s delinquency rate is still above average, at 3.06%.

Calgarians are the most non-mortgage-indebted Canadians at $28,184, and unfortunately it seems that delinquency is on the rise, increasing 6.64% to a rate of 2.89%.

Another report on debt, this one from RBC, revealed earlier this week that personal lines of credit are driving consumer debt, along with borrowing from alternative lenders.

It also found that there has been a rapid increase in car loans in the past decade. Car loan debt quadrupled in 10 years — just as auto sales have increased to record levels. TransUnion reports average balances are up 2.75% in the past year, but delinquency rates have remained flat, keeping them at “nicely controlled levels.”

What all these insights are saying is essentially that Canadians are managing their debt now. But debt loads could still become a major problem if something prevented the average person from being able to make their payments: something like rising interest rates. RBC concluded that a 1% increase in the key interest rate would force canadians to spend an additional 2% of their income to cover payments.

Canadians currently owe about $1.68 for every dollar they make and interest rates are expected to rise by the end of 2017.