Credit delinquency rates forecasted to rise: Equifax

By Staff | June 28, 2018 | Last updated on June 28, 2018
2 min read
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Credit delinquency rates for Canadians fell in Q1 2018, but slowing credit growth and interest rate hikes are likely to stop that trend, says Equifax Canada.

Still, for the first quarter, the company’s national consumer credit trends report finds consumer debt, including mortgages, was $1.8 trillion in Q1—a rise of 5.7% year-over-year. Loans and mortgages account for most of that growth, Equifax says in a release, but auto loans and bank loans also rose for the same period (8.3% and 10.6%, respectively).

The report also finds:

  • mortgage lending rose by 2.9% year-over-year;
  • non-mortgage debt increased by 2.9% in the last year, to $22,775; and
  • average mortgage holding was $204,850, a rise of 4% in the last year.

Read: Household debt and housing remain key risks for financial system

Also, the greater than 90-day delinquency rate dropped to 1.08% in Q1, from 1.15% in 2017, the release says. This rate was the lowest for the quarter since 2009, and only Saskatchewan and Newfoundland reported higher rates.

Further, all age groups and product types reported lower delinquency rates compared to post-2008 recession lows.

Now, however, the proportion of consumers paying their credit card balances in full is dropping, and there are indicators that credit performance is slipping from healthy levels, says Regina Malina, senior director of decision insights at Equifax Canada, in the release. “As unemployment holds at current levels and interest rates are likely to rise, we suspect delinquency rates to move modestly higher by year-end.”

Also read:

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The staff of have been covering news for financial advisors since 1998.