24 Apr 2013

Total consumer debt rises over same period last year according to Equifax Canada, serious consumer delinquencies are at an all-time low

Toronto, ON, Wednesday April 24, 2013 –- Equifax Canada’s March Consumer Credit Trends Report finds there was moderate growth in total consumer indebtedness (excluding mortgage debt), year-to-date through March 2013 with an increase of 3.9 per cent to $500.8 billion from $497 billion during the same timeframe in 2012.

The 90-plus day delinquencies for all credit products (excluding mortgages) has decreased by 13.4 per cent from the same time period in 2012 to a moderate 1.2 per cent, an all-time low. This rate was as high as 1.8 per cent during the height of the recession. Consumer bankruptcies are at very similar levels as in 2012.

Cristian deRitis, Senior Director of Consumer Credit Economics at Moody’s Analytics, commented on the report by adding “first quarter consumer credit conditions in Canada were mixed with outstanding balances rising and late-stage delinquency rates falling relative to a year ago. The Canadian economy is growing, albeit slowly, and the unemployment rate fell to 7.0 per cent in the first quarter. Outstanding household debt and available credit rose in the first quarter by 3.9 per cent and 4.4 per cent respectively on a year ago basis, breaking the trend in decelerating growth that began in 2011. Balances are increasing for bank installment loans, lines of credit and auto loans as Canadians continue to shun personal finance and sales finance loans.”

“Late-stage delinquency rates continue to show improvement, especially in the energy-rich economies of Edmonton and Calgary as well as in Vancouver and Ottawa,” added deRitis. “However, rising bankruptcy filings across the country reflect the growing financial strain on Canadian families, particularly in Montreal and Halifax. The largest single threat to consumer balance sheets remains property values. With outstanding mortgage balances continuing to grow at a 5 per cent annual rate, households as well as lenders remain vulnerable to a sudden change in the trajectory of home values.”

For major city by city data, please go to:
http://www.equifax.com/international/canada/Canadian_Consumer_Credit_Trends_Q1_2013.pdf

Nadim Abdo, Vice President, Client Solutions, Equifax Canada noted that “throughout 2012 and into the first quarter of 2013, we continue to see slower growth in overall credit and a vast improvement in serious delinquencies. This represents very positive financial control by consumers and lending institutions given the sustained low interest rate environment and improved employment rates,” Abdo added.

Other Equifax report findings include:

  • Total National Credit Card balances are declining to flat over the past nine quarters (from $79.2 Billion to $76.4 Billion).
  • Non-bank captive auto finance is one of the few credit portfolios growing at a robust pace versus the same period in 2012 (balances increased by 9.4 per cent from $50.8 Billion to $55.5 Billion).
  • Very moderate growth in Lines of Credit and HELOC’s likely due to housing market speculation and increased regulation (increased 3.3 per cent from $242.5 Billion to $250.6 Billion).• Very moderate growth in Lines of Credit and HELOC’s likely due to housing market speculation and increased regulation (increased 3.3 per cent from $242.5 Billion to $250.6 Billion).