Canadian HELOC, Credit Card, and Auto Loan Delinquencies Rise To Multi-Year Highs

Canadians were seeing credit defaults rise in almost every segment, before the pandemic. Equifax data obtained from the CMHC shows rising credit delinquencies in Q1 2020. The increase was most pronounced in auto and credit card loans. However, all segments but mortgages at a national level are climbing.

HELOC Delinquencies Rise To Highest Level Since 2016

Home equity lines of credit (HELOC) accounts saw a modest bump in delinquencies. The delinquency rate reached 0.17% in Q1 2020, unchanged from the previous quarter. This is up 6.25%, compared to the same quarter last year. Since delinquencies are typically seasonal, the year-over-year increase is the bigger takeaway. This is the highest HELOC delinquency rate since 2016.

Canadian Loan Delinquency Rates Q1

The rate of Q1 delinquencies by loan type, across Canada.

Source: Equifax, CMHC, Better Dwelling.

Credit Card Delinquencies Rise To Highest Level Since At Least 2015

The rate of credit card delinquencies in the first quarter reached a multi-year high. About 1.7% of credit card accounts were at least 90 days overdue in Q1 2020, up 8 bps from the previous quarter. This is an increase of 7.59% from the same quarter last year. The rate is the highest level of credit card delinquencies for any quarter in the past half decade.

Canadian Loan Delinquency Rate Change

The 12 month percent change in the rate of loan delinquencies for Q1 2020.

Source: Equifax, CMHC, Better Dwelling.

Canadian Auto Loan Delinquencies Soar To Highest Level In At Least 5 Years

Canadian auto loan delinquencies are rising at an unusually fast pace. The rate of delinquencies hit 2.14% in Q1 2020, up 15 bps from the previous quarter. Compared to the same quarter last year, this represents a 16.94% increase. The rate is the highest in at least 5 years, and judging from how low it was 5 years ago – it’s probably been a while since it’s been this high.

LOC Delinquency Rate Sees Biggest Q1 Since 2016

Lines of credit (LOC) are also seeing a higher rate of delinquencies this year. The rate of delinquencies hit 0.65% for LOCs in Q1 2020, up 1 bps from a month before. Compared to the same quarter last year, this represents a 3.17% increase. The rate is the highest since Q3 2019 – not that long ago. However, it hasn’t been this high in Q1 since 2016.

Mortgages Delinquencies Buck The Trend and Fall

The only segment of credit delinquencies to fall is mortgages, which saw the rate improve. The rate of mortgage delinquencies reached 0.29% in Q1 2020, unchanged from the previous quarter. Compared to the same quarter last year, this is actually a 3.33% decline. While this sounds great, there’s a few key markets where this rate is actually rising. However, we’ll dive into that a little later this week.

Delinquency rates were rising in the first quarter, before the pandemic fully set it. Since it takes 90 days of non-payment for a loan to become delinquent, that means the trend was already in process well before. Measures to contain the pandemic fallout are delaying the realization of bad loans. Consequently Q2 is likely to come in lower, but we’ll probably see a sharp increase once payment deferrals expire.

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  • Ian 2 years ago

    The real reason the government scrambled to delay loans. Insolvencies were also rising to the highest level in ten years too.

  • Fight Back 2 years ago

    The government is creating hyperinflation just to prop up real estate bubble. Why are we not investigating political and real estate corruption?? They are destroying our country and young families.
    Propping up real estate bubble is the most horrendous crime against Canadians.

    • SH 2 years ago

      Horrendous crime against YOUNG Canadians.

      The Boomers love it, and they care far more about their shacks than they do about their kids.

      • IamGroot 2 years ago

        Not all Boomers think like that. Some believe in generational wealth being passed down to their kids. Their kids stand to inherit quit a bit from their boomer parents. It appears to be a cultural thing as well.

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