Consumer delinquencies at lowest level since pre-recession according to Equifax Canada

Toronto, ON, November 6, 2012 - According to Equifax Canada’s Q3 Quarterly Credit Trends Report, as of September 30, 2012, consumer delinquencies have dropped to 1.22 per cent, the lowest level since before the financial crisis.

The report also reveals that total Canadian non-mortgage debt increased slightly by 1.8 per cent since last year. 

Furthermore, credit card balances continue to decrease, while other credit products such as bank loans and lines of credit show very moderate growth compared to the same period last year.

The greatest increase was captive Auto Finance loans, which grew by 9 per cent over last year. The report revealed the Auto Finance loans have the lowest level of delinquency.

“To see serious delinquencies drop to a record low of 1.22 per cent is a very positive sign that consumers are doing a great job at managing their debt obligations,” says Nadim Abdo, Vice President, Consulting Solutions, Equifax Canada.  “The growth in credit over the past two years has slowed down significantly and the Canadian appetite for new credit has also diminished. According to Equifax’s Credit Seeking Index, which measures the velocity at which consumers are seeking new credit facilities,  consumer demand for new credit now is 9 per cent lower than it was prior to the financial crisis.”

Cristian deRitis, Senior Director of Consumer Credit Economics at Moody’s Analytics commented on the report by adding “consumer credit conditions in Canada remain stable and are in line with Moody’s Analytics projections for GDP growth and unemployment. Debt levels and available credit continue to rise, though at a slower pace than several years ago. Balances are declining for credit cards, personal finance and sales finance loans as borrowers turn to bank installment loans and lines of credit to meet their needs.  Auto financing continues to experience rapid expansion as Canadians flock to dealer lots and showrooms,” deRitis explained.

Other Equifax Report observations:

• Average consumer non-mortgage indebtedness in Q3/2012 increased by 2.6 per cent in the last 12 months, compared to a growth of 4.4 per cent in the same period last year;
• Average credit card debt has continued to decrease for the past eight quarters; it decreased by 3.6 per cent in Q3/2012 from the same period last year;
• Average bank installment loans grew by 4 per cent over same period last year and average bank revolving loans (lines of credit) remained stable;
• 90-day delinquencies continue to improve and have decreased to a rate of 1.22 per cent; and
• Consumer bankruptcies slightly increased slightly by 5 per cent from the same period last year.

For detailed graphs, please go to:

http://www.equifax.com/international/canada/Q3_2012_Consumer_Trends_Equifax_Canada.pdf