Canadian consumer debt grows, credit card debt falls to six-year low
Posted June 8, 2021 4:14 pm.
Last Updated June 8, 2021 4:15 pm.
VANCOUVER (NEWS 1130) – It seems Canadians have been living more frugally during the pandemic, with credit card debt falling to a six-year low.
Overall consumer debt is up across Canada and now stands at $2.08 trillion — an increase of close to five per cent — year over year.
Rebecca Oakes is the AVP of Advanced Analytics at Equifax and says you can blame mortgage costs (up 41.2 per cent from a year ago) due to the red hot real estate market in B.C. and Ontario.
“[For example] home secured lines of credit, we’re seeing those go up a little bit in terms of some of the balances on new lines that are being originated.”
The good news is Canadians can start to see non-mortgage debt come down she says.
“And that started as part of the lockdowns and things back in March, April time last year, where consumers weren’t going out as much, they’re not booking vacations.”
Delinquencies were still happening at a much lower rate than pre-pandemic, as consumers continue to benefit from government financial support during the pandemic she says. But Oakes warns people need to prepare for those supports to subside to ensure their financial health.
On average, credit card balances dropped by 9.9 per cent in the first quarter of this year. But Oakes tells us mortgage costs are pushing consumer debt levels higher.
“We’ve seen the overall consumer debt on mortgages is on the rise, and that’s been like that since the last two to three quarters,” she said.
A new mortgage stress test introduced by the Office of the Superintendent of Financial Institutions (OSFI) could cool things off, but right now, Oakes says it’s hard to predict whether that will actually happen.
“We kind of expect it to reduce the buying power on consumers getting uninsured mortgages by about four to five per cent. So it’s not huge.”
“I think there will be some impacts, but we expect it to be relatively small.”
– With files from The Canadian Press