This past winter saw people taking on more debt all across Canada, but Toronto residents seemed to be hit hardest when it came to non-mortgage debt, according to an Equifax report released Tuesday.
Excluding mortgages, the average consumer debt in Toronto totalled $23,047 in the first quarter of 2019, a 5% jump compared to the same period in 2018. While this was the highest rate of growth among the country’s major cities, when it comes to actual debt load, Toronto still lags behind the national average ($23,496) as well as every other city besides Montreal ($17,796) and Ottawa ($22,595).
Edmonton was the major city that saw the second-highest increase in non-mortgage debt, which grew by 4.7% compared to the first quarter of 2018, to $28,374. The only major Canadian city where debt actually decreased was Halifax, which saw a 0.1% drop to $23,573.
The general increase in Canadian debt can be attributed to people relying more on their existing — and not new — lines of credit, said Equifax, which also noted that Canadians were taking advantage of longer loan terms to pay down their debts more slowly.
“Consumers were opening fewer new credit products in early 2019, but they certainly weren’t curtailing the use of their existing credit,” said Bill Johnston, vice president of data & analytics at Equifax Canada.
“Loans are taking longer to pay down and credit card use is on the rise,” he added. “The headline numbers for non-mortgage debt had been driven by population growth for the past 18 months, but it was increased usage that drove the rise in credit during the first quarter of this year.”
In addition to shouldering bigger debt loans, Canadians are also having issues making payments on time. Ninety-day-plus delinquency rates have risen slightly to 1.12% — a 3.5% increase. This growth was led by seniors, whose delinquency rate increased by 9.4% in the first quarter.
The cities where delinquency rates grew the most were St. John’s (12.7%), Vancouver (9.9%) and Halifax (9.6%).
Interest rates in Canada have been on the rise over the past two years. The Bank of Canada began increasing rates in 2017, with the most recent of five hikes taking place in October 2018 and bringing rates to 1.75%. Most experts expect the BoC to keep rates unchanged until the end of 2020 — no doubt it will be watching this growth in delinquencies with concern.