Consumer Debt is Up with Renewed Mortgage Activity

Rhea-AI Summary

Equifax Canada's latest report shows that total consumer debt reached $1.991 trillion in Q2 2020, marking a 2.8% increase from Q2 2019. Average debt per person rose to $73,532, a 2.2% year-over-year gain. Strong mortgage activity, driven by a recovery in the housing market and refinancing efforts, contributed significantly. However, non-mortgage debt decreased, reflecting economic impacts from COVID-19. The 90+ day delinquency rate for non-mortgage debt was 1.24%, up 10.6%% from last year. Payment deferrals were widely utilized, with notable usage among the 35–44 age group.

Positive

• Consumer debt increased to $1.991 trillion, a 2.8% rise year-over-year.
• Average debt per person rose to $73,532, up 2.2% year-over-year.
• Recovery in the housing market supported strong mortgage activity.
• Credit card spending returned to pre-COVID levels by the end of Q2.

Negative

• Non-mortgage debt declined, indicating economic stress.
• 90+ day delinquency rate for non-mortgage debt increased to 1.24%, up 10.6% year-over-year.
• A significant portion of consumers is still facing financial stress despite support mechanisms.

TORONTO, Sept. 03, 2020 (GLOBE NEWSWIRE) -- Despite the economic impact of COVID-19, a strong recovery in the Canadian housing market and a slower paydown of existing mortgages helped push total consumer debt to 1.991 trillion dollars in the second quarter, according to Equifax Canada’s most recent report on consumer credit conditions. Consumer debt is up 2.8 per cent compared to the same quarter in 2019.           

Rising mortgage balances helped push the average debt per person to $73,532, up 2.2 per cent compared to the second quarter of 2019. Mortgages were supported by a bounceback in home sales from the pandemic lows in March and April alongside increased refinancing activity and higher average home prices.  Non-mortgage debt was down relative to 2019, as credit cards, auto loans and lines of credit felt the weight of the economic shut down in most regions.

“Mortgage activity has withstood the headwinds from COVID and showed the earliest signs of recovery,” said Rebecca Oakes, AVP of Advanced Analytics at Equifax Canada. “Other credit products began to show greenshoots of a bounceback with credit card spending starting to rise in June. Card spending for those not using a payment deferral on their credit card were effectively back to pre-COVID levels by the end of the quarter.”

The use of support mechanisms during the COVID-19 pandemic has been widespread with more than three million consumers utilizing a COVID-related payment accommodation at some point since February. The 35 – 44 year-old age group have been the heaviest users where 15.1 per cent have utilized some form of payment deferral compared to only 5.7 per cent for seniors. Deferrals have been dropping in recent weeks.

“Everyone’s situation is different. Some consumers who were feeling financial stress prior to the pandemic are showing improved credit behaviour since March and may be leveraging deferrals to assist in paying down outstanding debts,” added Oakes. “There remains a group that is feeling the financial stress of the pandemic and is reporting more missed payments.”

Pandemic impact on delinquencies and bankruptcies

The 90+ day delinquency rate (the percentage of balances where credit users have missed 3+ payments) for non-mortgage debt was 1.24 per cent (10.6% up compared to Q2 2019). This continues a trend from 2019 and does not measure the full weight of COVID. Younger borrowers saw a drop in overall delinquency rate compared to Q1, but this may be reflective of the increased usage of payment deferrals and government-support benefits.

“Delinquency rates held up relatively well and do not reflect the sharp rise in job losses thanks to the various support mechanisms,” concluded Oakes. “One in five people utilizing deferred payments were already financially stressed prior to the start of the pandemic. Some of these consumers may find it harder to recover as support mechanisms start to reduce.”

Debt (excluding mortgages) & Delinquency Rates

Age	Average Debt (Q2 2020)		Average Debt Change Year-over-Year (Q2 2020 vs. Q2 2019)		Delinquency Rate (Q2 2020)		Delinquency Rate Change Year-over-Year (Q2 2020 vs. Q2 2019)
18-25	$8,532		-0.94	%	1.73	%	2.35	%
26-35	$17,596		-3.31	%	1.73	%	8.37	%
36-45	$27,669		-3.90	%	1.41	%	10.85	%
46-55	$35,135		-2.36	%	1.08	%	13.00	%
56-65	$29,611		-2.15	%	0.95	%	11.86	%
65+	$16,074		-2.87	%	1.10	%	12.11	%
Canada	$23,035		-3.00	%	1.24	%	10.62	%

Major City Analysis – Debt (excluding mortgages) & Delinquency Rates

City	Average Debt (Q2 2020)		Average Debt Change Year-over-Year (Q2 2020 vs. Q2 2019)		Delinquency Rate (Q2 2020)		Delinquency Rate Change Year-over-Year (Q2 2020 vs. Q2 2019)
Calgary	$28,890		-3.64	%	1.46	%	12.54	%
Edmonton	$27,571		-4.23	%	1.72	%	15.68	%
Halifax	$22,790		-3.69	%	1.47	%	-4.79	%
Montreal	$17,053		-5.07	%	1.33	%	11.73	%
Ottawa	$21,819		-4.66	%	1.04	%	13.43	%
Toronto	$22,651		-3.08	%	1.34	%	13.79	%
Vancouver	$25,940		-3.13	%	0.86	%	14.78	%
St. John's	$24,775		-2.67	%	1.65	%	-3.17	%
Fort McMurray	$39,142		-0.82	%	2.09	%	19.59	%

Province Analysis - Debt (excluding mortgages) & Delinquency Rates & Bankruptcy Amount

Province	Average Debt (Q2 2020)		Average Debt Change Year-over-Year (Q2 2020 vs. Q2 2019)		Delinquency Rate (Q2 2020)		Delinquency Rate Change Year-over-Year (Q2 2020 vs. Q2 2019)
Ontario	$23,663		-2.75	%	1.13	%	12.83	%
Quebec	$19,054		-3.14	%	1.08	%	9.58	%
Nova Scotia	$22,019		-2.67	%	1.71	%	-3.08	%
New Brunswick	$23,324		-1.69	%	1.80	%	-1.46	%
PEI	$22,728		-2.08	%	1.18	%	-9.81	%
Newfoundland	$23,452		-1.95	%	1.75	%	-4.78	%
Eastern Region	$22,782		-2.17	%	1.71	%	-3.28	%
Alberta	$28,261		-3.84	%	1.63	%	13.78	%
Manitoba	$18,243		-3.58	%	1.50	%	8.68	%
Saskatchewan	$23,984		-3.59	%	1.61	%	5.77	%
British Columbia	$24,289		-2.96	%	1.02	%	15.03	%
Western Region	$25,063		-3.42	%	1.36	%	12.63	%
Canada	$23,035		-3.00	%	1.24	%	10.62	%

* Based on Equifax data for Q2 2020

About Equifax
At Equifax (NYSE: EFX), we believe knowledge drives progress. As a global data, analytics, and technology company, we play an essential role in the global economy by helping financial institutions, companies, employees, and government agencies make critical decisions with greater confidence. Our unique blend of differentiated data, analytics, and cloud technology drives insights to power decisions to move people forward. Headquartered in Atlanta and supported by more than 11,000 employees worldwide, Equifax operates or has investments in 25 countries in North America, Central and South America, Europe, and the Asia Pacific region. For more information, visit Equifax.ca and follow the company’s news on LinkedIn.

Contact:

Andrew Findlater
SELECT Public Relations
afindlater@selectpr.ca
(647) 444-1197

Equifax Canada Media Relations
MediaRelationsCanada@equifax.com

 

FAQ

What is the total consumer debt in Canada for Q2 2020 according to Equifax?

Total consumer debt in Canada reached $1.991 trillion in Q2 2020.

How much did the average debt per person increase in Canada in Q2 2020?

The average debt per person in Canada increased to $73,532, a rise of 2.2% from Q2 2019.

What was the 90+ day delinquency rate for non-mortgage debt in Q2 2020?

The 90+ day delinquency rate for non-mortgage debt was 1.24% in Q2 2020.

How did the pandemic impact credit card spending in Canada?

Credit card spending returned to pre-COVID levels by the end of Q2 2020.

What demographic utilized the most payment deferrals during the pandemic?

The 35-44 age group had the highest usage of payment deferrals at 15.1%.