TORONTO, March 04, 2021 (GLOBE NEWSWIRE) – Rising mortgage activity and rising house prices in the fourth quarter of 2020 brought overall consumer debt levels to $ 2.07 trillion, in Up 1.5% from the previous quarter and 4.1% from the fourth quarter of 2019, according to Equifax Canada’s most recent report on consumer credit conditions.
Despite the increase in total debt, average consumer debt (excluding mortgages) declined further this quarter to $ 23,043, down 3.0% year over year and 0.8% compared to the previous quarter. The decline in consumer debt is mainly due to credit card balances which have been gradually declining since March of last year due to reduced spending and consumers repaying more of their balances over a period of time. monthly basis.
“This reduction has been a positive change for consumers, but that doesn’t mean we’ve gone out of the woods in terms of recovery,” said Rebecca Oakes, assistant vice president of advanced analytics at Equifax Canada. “Deferral programs are coming to an end and pockets of financial stress are starting to appear for some consumers. Credit card spending is also starting to rise again.
Deferrals and unpaid bills during the pandemic
More than three million Canadians have taken advantage of credit payment deferrals since the start of the pandemic and four in five have now completely abandoned the use of deferral programs. Payment deferrals have helped prevent consumers affected by the pandemic from becoming delinquent on their debt obligations. Even as consumers exit deferral programs, the 90-day and above default rate for non-mortgage products remained stable in the fourth quarter at 0.98 percent while the same rate for mortgages was 0.16 percent. However, early-stage delinquency (when an individual missed a month or two of payments) continued to increase in the fourth quarter. Mortgages saw a 31% increase in the 30-day and above default rate, while the 30-day and above default rate on installment loans jumped 76% from the third quarter of 2020.
“The numbers suggest that the recovery will remain very patchy,” Oakes added. “Quebec, for example, has shown that non-mortgage early delinquency continues to decline despite consumers withdrawing from deferral programs, while Alberta has the largest increase in consumers missing mortgage payments. Support mechanisms across Canada remain essential in preventing a further rise in levels of delinquency.
First-time home buyers, low interest rates and credit
Strong housing demand and falling interest rates continued to fuel new mortgages with volume growth of 22.1% year over year in the fourth quarter of 2020. Average loan size Mortgages increased 14.4% from the fourth quarter of 2019, marking the most important year. year-over-year jump since 2015. The higher loan amounts can also be attributed to first-time homebuyers who experienced above-average year-over-year volume growth of 26.9% in the fourth quarter of 2020.
“Rising prices in real estate hot spots have led first-time homebuyers to take on more mortgage debt than ever before in order to step onto the property ladder,” Oakes said. “For example, in British Columbia, we saw average new mortgages for first-time buyers exceed $ 470,000 in the last quarter, but they are not deterred; volumes increased by more than 35% compared to the same period in 2019. ”
New auto finance and installment loans trended down this quarter with 8.4% and 21.5% year-over-year declines respectively, while new credit cards declined. are slowly recovering with an increase of 10% over the previous quarter.
Lenders are also showing some signs of caution due to this uncertain period. Consumers are still offered additional credit, but on higher interest rate products like credit cards, limits on newly opened cards have been lower in the past two quarters compared to the same periods in 2019. .
“During times of economic uncertainty, consumers and lenders can take proactive steps to reduce variability in credit commitments, by changing or encouraging the use of products with lower interest rates,” Oakes said. . “We are still in uncertain times with the emergence of a few isolated pockets of financial stress. We will continue to monitor this closely over the next few months. “
Debt (excluding mortgages) and default rate
| Age | Average debt (Q4 2020) |
Average change in debt Year after year (Q4 2020 vs. Q4 2019) |
Delinquency rate (Q4 2020) |
Change in failure rate Year after year (Q4 2020 vs. Q4 2019) |
||||||||||||
| 18-25 | $ 8,747 | -1.13% | 1.29% | -21.48% | ||||||||||||
| 26-35 | $ 17,868 | -2.35% | 1.37% | -20.04% | ||||||||||||
| 36-45 | $ 27,893 | -3.36% | 1.10% | -19.64% | ||||||||||||
| 46-55 | $ 35,252 | -2.73% | 0.86% | -16.27% | ||||||||||||
| 56-65 | $ 29,369 | -3.13% | 0.77% | -14.77% | ||||||||||||
| 65+ | $ 15,871 | -3.76% | 0.91% | -13.90% | ||||||||||||
| Canada | $ 23,043 | -3.02% | 0.98% | -17.52% | ||||||||||||
Big city analysis – Debt (excluding mortgages) & Delinquency rate
| City | Average debt (Q4 2020) |
Average change in debt Year after year (Q4 2020 vs. Q4 2019) |
Delinquency rate (Q4 2020) |
Change in failure rate Year after year (Q4 2020 vs. Q4 2019) |
|||
| Calgary | $ 28,829 | -3.22% | 1.19% | -13.60% | |||
| Edmonton | $ 27,319 | -3.64% | 1.43% | -10.57% | |||
| Halifax | $ 22,584 | -4.16% | 1.17% | -23.12% | |||
| Montreal | $ 17,103 | -4.76% | 0.94% | -27.25% | |||
| Ottawa | $ 21,891 | -3.82% | 0.82% | -17.23% | |||
| Toronto | $ 23,200 | -1.24% | 1.09% | -13.75% | |||
| Vancouver | $ 26,172 | -1.59% | 0.69% | -15.02% | |||
| St. John’s | $ 25,155 | -1.54% | 1.35% | -22.27% | |||
| Fort McMurray | $ 39,717 | 0.11% | 1.69% | -13.02% | |||
Provincial Analysis – Debt (excluding mortgages) & Delinquency rate
| Province | Average debt (Q4 2020) |
Average change in debt Year after year (Q4 2020 vs. Q4 2019) |
Delinquency rate (Q4 2020) |
Change in failure rate Year after year (Q4 2020 vs. Q4 2019) |
|||
| Ontario | $ 23,883 | -2.14% | 0.91% | -15.31% | |||
| Quebec | $ 18,888 | -4.76% | 0.75% | -28.82% | |||
| New Scotland | $ 21,969 | -2.98% | 1.37% | -23.59% | |||
| New Brunswick | $ 23,217 | -2.74% | 1.51% | -18.52% | |||
| PEI | $ 23,070 | -0.70% | 0.96% | -21.91% | |||
| Newfoundland | $ 23,836 | -0.99% | 1.40% | -23.71% | |||
| eastern region | $22 832 | -2.32% | 1.40% | -21.89% | |||
| Alberta | $ 28,099 | -3.36% | 1.36% | -10.96% | |||
| Manitoba | $ 18,030 | -4.68% | 1.21% | -17.93% | |||
| Saskatchewan | $ 23,927 | -3.48% | 1.32% | -16.54% | |||
| British Columbia | $ 24,317 | -2.15% | 0.83% | -14.66% | |||
| Western region | $24 988 | -2.95% | 1.12% | –13.60% | |||
| Canada | $23,043 | –3.02% | 0.98% | -17.52% | |||
* Based on Equifax data for Q4 2020
About Equifax
At Equifax (NYSE: EFX), we believe knowledge is the engine of progress. As a global data, analytics and technology company, we play a vital role in the global economy by helping financial institutions, businesses, employees and government agencies make critical decisions with greater trust. Our unique blend of differentiated data, analytics, and cloud technologies generate insights that are useful to make decisions and get people moving. Based 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.
