Consumers Headed to the Sidelines Early in March, as the Pandemic Shutdown Slowed Bankruptcies in Q1

Rhea-AI Summary

Equifax Canada reported a 0.5% decline in average non-mortgage debt for Q1 2020, marking the first drop in over a decade, attributed to reduced consumer spending amid COVID-19 shutdowns. Average debt per person reached $73,030, up 2.4% year-over-year, while total debt climbed 4.3% to $1.989 trillion. Mortgage balances rose 5.7%, despite a significant drop in new credit inquiries. The 90+ day delinquency rate for non-mortgage debt increased to 1.22%. The report highlights a potential rise in delinquencies and bankruptcies later in the year as economic impacts continue.

Positive

• Total outstanding debt increased 4.3% to $1.989 trillion.
• Average debt per person rose to $73,030, a 2.4% increase year-over-year.
• Mortgages grew by 5.7% compared to 2019, indicating a resilient housing market.

Negative

• Average non-mortgage debt decreased by 0.5%, the first decline in over a decade.
• The 90+ day delinquency rate for non-mortgage debt rose to 1.22%, with notable spikes in certain provinces.
• A significant decline in inquiries for new credit suggests a drop in credit demand.

TORONTO, June 16, 2020 (GLOBE NEWSWIRE) -- Equifax^® Canada’s latest report on Canadian consumer credit provides a view into the early impact of the COVID-19 shutdowns. Average non-mortgage debt dropped 0.5 per cent in the first quarter of 2020 reflecting the significant drop in consumer spending in March. This is the first decline in average balances in more than a decade.

“With stores and restaurants shut down, consumers were able to cut back on their spending in March as retail sales numbers indicated,” said Bill Johnston, Equifax Canada’s Vice President of Data & Analytics. “The result was a plunge in credit card spending that translated into much lower balances. That trend gained momentum in April, with few signs that consumers are looking to debt for support in the early days of the pandemic.”

In total, average debt per person rose to $73,030, an increase of 2.4 per cent compared to the first quarter of 2019. Total outstanding debt was up 4.3 per cent to $1.989 trillion dollars. Despite the pandemic, mortgages continued to gain upward momentum, rising 5.7 per cent compared to 2019. This growth reflects home sales prior to the economic shutdown, as activity slowed considerably by the end of March.

The impact of the pandemic has been most evident in the volume of consumers looking for new credit. Inquiries from lenders dropped significantly in mid-March and early April. This is a good indicator of credit demand. The trend has been improving in recent weeks, led by mortgage and auto financing.

“Our data showed the sudden drop in credit demand as the economy shutdown in late March,” added Johnston. “Those industries more dependent on physical retail locations were the most impacted, but it appears the worst is behind us.”

Pandemic impact on delinquencies and bankruptcies

The 90+ day delinquency rate (the percentage of credit users that have missed 3+ payments) for non-mortgage debt delinquency rate rose to 1.22 per cent (9%). British Columbia (+12.65%), Ontario (12.33%) and Alberta (11.79%) were once again the highest in this category. Overall, the younger borrowers have demonstrated more stable delinquency rates in the early phase of the pandemic, which may partly be reflected in the increased use of payment deferrals.

“The delinquency trend rose again in Q1, but it was not a real reflection of COVID,” added Johnston. “Bankruptcies finally slowed and we know April was also very low as services shut down. Unfortunately, that trend will likely not continue, as we expect delinquencies and bankruptcies to rise in the latter part of the year.”

Debt (excluding mortgages) & Delinquency Rates

100%; border-collapse:collapse !important;">

20%; width:20%; min-width:20%;">Age	20%; width:20%; min-width:20%;">Average Debt (Q1 2020)	20%; width:20%; min-width:20%;">Average Debt Change  Year-over-Year (Q1 2020 vs. Q1 2019)	20%; width:20%; min-width:20%;">Delinquency Rate (Q1 2020)	20%; width:20%; min-width:20%;">Delinquency Rate Change  Year-over-Year (Q1 2020 vs. Q1 2019)
18-25	$8,588	-1.03%	1.87%	11.20%
26-35	$17,896	-0.92%	1.76%	9.48%
36-45	$28,321	-0.65%	1.39%	9.10%
46-55	$35,818	0.82%	1.04%	9.56%
56-65	$30,013	0.47%	0.90%	7.75%
65+	$16,214	-0.45%	1.06%	7.18%
Canada	$23,386	-0.47%	1.22%	8.99%

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

100%; border-collapse:collapse !important;">

20%; width:20%; min-width:20%;">City	20%; width:20%; min-width:20%;">Average Debt (Q1 2020)	20%; width:20%; min-width:20%;">Average Debt Change  Year-over-Year (Q1 2020 vs. Q1 2019)	20%; width:20%; min-width:20%;">Delinquency Rate (Q1 2020)	20%; width:20%; min-width:20%;">Delinquency Rate Change  Year-over-Year (Q1 2020 vs. Q1 2019)
Calgary	$29,316	-1.97%	1.43%	13.36%
Edmonton	$27,915	-1.62%	1.65%	10.90%
Halifax	$23,094	-2.03%	1.54%	-4.89%
Montreal	$17,512	-1.59%	1.28%	4.69%
Ottawa	$22,223	-1.65%	1.03%	10.22%
Toronto	$22,965	-0.35%	1.31%	12.69%
Vancouver	$26,190	-1.65%	0.83%	12.10%
St. John's	$25,089	-0.70%	1.68%	-1.00%
Fort McMurray	$39,488	1.23%	2.01%	7.89%

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

100%; border-collapse:collapse !important;">

20%; width:20%; min-width:20%;">Province	20%; width:20%; min-width:20%;">Average Debt (Q1 2020)	20%; width:20%; min-width:20%;">Average Debt Change  Year-over-Year (Q1 2020 vs. Q1 2019)	20%; width:20%; min-width:20%;">Delinquency Rate (Q1 2020)	20%; width:20%; min-width:20%;">Delinquency Rate Change  Year-over-Year (Q1 2020 vs. Q1 2019)
Ontario	$24,043	0.05%	1.11%	12.33%
Quebec	$19,488	0.40%	1.05%	4.09%
Nova Scotia	$22,255	-1.29%	1.78%	-2.29%
New Brunswick	$23,512	0.19%	1.85%	0.79%
PEI	$22,885	-0.69%	1.20%	-11%
Newfoundland	$23,614	-0.69%	1.80%	-0.53%
Eastern Region	$22,982	-0.66%	1.77%	-1.34%
Alberta	$28,615	-1.72%	1.58%	11.79%
Manitoba	$18,449	-1.95%	1.52%	7.11%
Saskatchewan	$24,247	-2.44%	1.64%	7.31%
British Columbia	$24,521	-1.34%	1.00%	12.65%
Western Region	$25,339	-1.64%	1.33%	10.97%
Canada	$23,386	-0.47%	1.22%	8.99%

* Based on Equifax data for Q1 2020

About Equifax
Equifax is a global information solutions company that uses unique data, innovative analytics, technology and industry expertise to power organizations and individuals around the world by transforming knowledge into insights that help make more informed business and personal decisions. Headquartered in Atlanta, Ga., Equifax operates or has investments in 24 countries in North America, Central and South America, Europe and the Asia Pacific region. It is a member of Standard & Poor's (S&P) 500® Index, and its common stock is traded on the New York Stock Exchange (NYSE) under the symbol EFX. Equifax employs approximately 11,000 employees worldwide. 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

Tom Carroll
Equifax Canada, Media Relations
MediaRelationsCanada@equifax.com
(416) 227-5290

FAQ

What is the impact of COVID-19 on Canadian consumer debt according to Equifax's June 2020 report?

Equifax's report shows a 0.5% decline in average non-mortgage debt and a significant drop in consumer spending due to COVID-19 shutdowns.

How much did the average non-mortgage debt change in Q1 2020?

The average non-mortgage debt dropped by 0.5% in Q1 2020, marking the first decline in over a decade.

What was the delinquency rate for non-mortgage debt in Canada in Q1 2020?

The 90+ day delinquency rate for non-mortgage debt rose to 1.22% in Q1 2020.

What trends did Equifax report in mortgage lending during the pandemic?

Despite the pandemic, mortgages gained momentum, with a 5.7% increase compared to 2019.

What is the outlook for delinquencies and bankruptcies according to Equifax?

Equifax expects delinquencies and bankruptcies to rise later in the year as the pandemic's economic effects continue.