Canada's consumer debt balance rose to an all-time high in the fourth quarter of 2017 despite efforts to reduce personal debt, Equifax Canada said in its Q4 National Consumer Credit Trends Report.
Mortgages included, Canadians owed C$1.821 trillion as of the last quarter of 2017, up from C$1.797 trillion in the third quarter and C$1.718 trillion in the fourth quarter of 2016. Installment loans, auto loans and mortgages saw the most significant increases year over year, up 10.3%, 6.5% and 6.2%, respectively. Some 46% of Canadian consumers were able to lower their debt in the fourth quarter of 2017 while 37% accumulated more debt. Those who added more debt did so in larger amounts on average. This led to a 3.3% increase in the average debt held by all Canadians to C$22,837 per person.
The credit reporting agency also reported signs consumers are managing to keep on top of their debts. The 90-day-plus delinquency rate dropped by 6.4% year over year and consumer bankruptcies declined by 1.7%. Delinquencies fell across all age groups, but the decline was most noticeable among those under the age of 25.
"Despite the high debt, mortgage payments are generally on time, which could be attributed to low unemployment numbers and mortgage and auto finance interest rates which are still at historically low and reasonable levels," Equifax's Regina Malina said. "As the new mortgage rules begin to impact approval rates, there may be a shift in the profile of mortgage customers, and activity in the real estate market, but at this point most people are managing their payments."
Speaking to the Financial Post, Malina said debt is still sustainable given the present economic environment but warned that things might change. "I think, because of the high debt, it is more important than ever to remind consumers to stick to the key principles of responsible spending and budgeting," she said.
