Canada

Equifax: Canadian Credit Delinquencies Are Spiking, Seniors See Largest Increase

One of Canada’s top credit bureaus warned of higher delinquencies in 2019, and here they are. Equifax numbers show consumer delinquencies are on the rise in Q1 2019. The move was expected by the firm, which stated in the previous quarter, that 2019 would see higher levels. The overall rates remain relatively low, however credit delinquencies are a lagging indicator.

Seniors See Biggest Jump In Delinquencies

Delinquencies are rising across every age demographic, but the youngest and oldest were most notable. The rate of credit delinquencies hit 1.12% across Canada in Q1 2019, up 3.5% from last year. The youngest demographic, aged 18-25 had the highest rate of delinquency at 1.68% – up 0.1% from last year. People aged 65+ had a delinquency rate of 0.99%, up a massive 9.4% from last year. The youngest demographic showed the smallest change, indicating stabilization at that rate. The oldest demographic experienced the largest increase of any segment, indicating deterioration.

Canadian Delinquency Rate Percent Change

The annual percent change in consumer credit delinquencies by age, in Q1 2019.

Source: Equifax, Better Dwelling.

Toronto Borrowers Make The Biggest Climb In Average Debt

Not surprising anyone, household debt levels (excluding mortgages) are rising across Canada. Canadian consumers held an average of debt balance of $23,496 in Q1 2019, up 3.2% from last year. Zooming in, Toronto’s average consumer is carrying $23,047, up 5% from last year. Vancouver was slightly higher at $26,629, up 2.8% from last year. Montreal consumers had an average of $17,796, up 2.6% from last year. Toronto’s growth was the highest of any major city in the country.

Canadian Average Consumer Debt

The average debt held by Canadian consumers in Canadian dollars.

Source: Equifax, Better Dwelling.

Toronto and Vancouver See Substantial Increases In Delinquencies

Consumer delinquencies are climbing quickly in Canada’s most expensive cities. The rate of delinquency in Toronto reached 1.16% in Q1 2019, up 3.6% from last year. Vancouver reached 0.74%, up 9.9% from last year. Montreal ended the quarter at 1.22%, up 1.0% from last year. The total rate in Vancouver is still relatively low, but the increase was only second to Ft. McMurray. To contrast, Montreal consumers hold low levels of debt, and made a minimal movement.

Canadian Delinquency Rate By City (Change)

The annual percent change in the rate of consumer delinquencies by major city, Q1 2019.

Source: Equifax, Better Dwelling.

The rate of delinquencies across Canada is still low, but is increasing quickly. Expensive cities like Toronto and Vancouver, are seeing higher levels of growth. More affordable cities, where consumers carry a lower average of debt, are stable. Worth noting that consumer delinquencies lead mortgage delinquencies. However, mortgage delinquencies aren’t common until liquidity begin to disappear.

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19 Comments

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  • Yield Chaser 3 months ago

    Low interest rates working as designed. Seniors depend on stable investments that provide interest payments. Eliminate the interest, they need to start withdrawing equity which leaves them put longer longer than if they could go anywhere with a little stable income.

    • It's That Easy 3 months ago

      Funny how that works.

      – Lower interest rates
      – Force people to spend by making savings useless.
      – Inflate asset values so they have to speculate or lose value in real terms
      – Old people that only have their house need to withdraw equity to make up the difference
      – debt pile is now so big, seniors can’t move since they spent the difference
      – Since seniors have to stay still, they apply more pressure to prime working real estate
      – lower productivity, increase commute time for the most productive demographics
      – lose out to China

    • Sonja Tait 3 months ago

      You are 100% correct with your statement.

  • CanadaSucks 3 months ago

    Canada will do what it always did in the past no matter who is in power. Canada will increase the immigration number and hope it translate into news housing and economical growth .Canada has no real economical strategy. To quote Jason Kenney of Alberta, Canada should use the magic of immigration. I think it is pretty obvious what it means. Canada is a failed nation using immigration as an economical strategy. More immigrants means more houses. Canada economical strategy is to become of nation of house builder. China economical strategy is to become the manufacturing hub of the world. Canada is a failed nation. If you are young leave now.

    Canada will also increase the number of student visa. Student visa are used to keep external demand on Canadian currency so it does not go down too much. As manufacturing is shutting down in Canada there will less and less demand for CAD currency. Student visa are there to create an external demand for the CAD.

  • Grim Reaper 3 months ago

    Seniors are going to increasingly credit default after their home equity loans are exhausted and their meagre pensions can’t sustain them.

  • zz 3 months ago

    great news~~ waiting to scoop up some delinquent properties in the near future

    • Grim Reaper 3 months ago

      Keep dreaming, seniors’ properties will not be below market value/price bankruptcy/distress sales, their properties will be sold like any other to the highest bidder, no bargains.

      • Lessdanadalla 3 months ago

        No bargains? LOL … just be patient and wait. By the end of 2020, the market will be on a steady losing streak.

        • Mmr 3 months ago

          Yes now deadline pushed to 2020…it was 2001 then 2002 then 2010…2015? 2017!!! 2018 yesss yesss!! That is it…2050?????? Yes for sure market will crash and you can finally buy a shoe box at 2050 If you still alive by then.

          • J 3 months ago

            Nope, if it doesn’t crash, they will say it’s dead cat bounce/real estate recession takes places over a long period of time/any other reasons to justify their view.

            Crash? Doubt it…Slow down? More likely.

          • Lessdanadalla 3 months ago

            LOL … you’re on fire Mmr!!! Maybe you’re just upset with fact your daily bread is turning into crumbs. You’re selling real estate, aren’t you? There is no deadline, sales are on steady decline since mid 2018 and trend will continue at accelerated pace.

          • carlton 3 months ago

            Crack heads! Everyone knows Canada can never have a real estate crash. Right mmr? Real estate can only go one way in Canada and thats up. As a matter of fact we should all go buy at least 2 condos a million a piece before we get priced out, its gonna keep going up till 2050 and beyond……

            Just like Vancouver …… Lol

            I wonder how long it will take for the average Canadian to pay off that million dollar mortgage? I can guess ……. bankruptcy will come first. Good luck you genius investor ….. up up and away!

          • Neo 3 months ago

            MMR,

            Who was calling for a crash in 2002? Prices nominally only got back to 1989 peak prices in 2002. The market won’t crash unless there is nasty recession. It’s already on a path to a long 5 year march lower though. The peak was spring 2017 .

      • BailinginBC 3 months ago

        What is your point here? Assuming a reasonably efficient housing market, of course properties will not sell for below market value and will be sold to the highest bidder. That the way things work.

        The question is – will market value be higher in the future or lower? Will the highest bidder be willing to pay more than today or less?

        As for whether the price is a bargain or not is in the eye of the beholder.

      • Taki 3 months ago

        “sold like any other to the highest bidder, no bargains.”

        Except in the country’s most expensive city, where people are taking > 20% losses?

  • Zenity 3 months ago

    Well morons who thinks housing should keep going higher is just stupid. They don’t realize the fundamentals. Canada especially Toronto basically have too much land. With Canada’s economy based on high taxation and universal health care, the system itself is designed to transfer wealth from young people to keep boomers alive. Now with this housing bubble we are doing further wealth transfer where young families have to take on huge mortgages and pay high taxes.

    Once smart people start to realize what is going on those that have in demand skills will leave. Taxing their taxes for future decades and consumer spending with them. The best always leave first because they have the choice. eventually you will be left with low skill labor that you can’t really tax then the health care system goes and the boomers get screw anyways.

    The best way for a society to build wealth is to give resources to young productive talent so they can create business and other ventures. Not tax and suck all their income and transfer it to old and non productive segments of society. If the housing price don’t come down Canada is headed for economic collapse soon.

    I urge all young families to be responsible for you and your families future and consider other places where cost of living is not so high.

    • Owen Roberts 3 months ago

      Good idea to move to a new jurisdiction. Where politicians and governments are honest. Where taxes are lower. Where necessities of life are easier to come by. There is a good education system and we have freedom to express ourselves however we want.
      Where is this place exactly?
      I hear their talking about setting up colonies on the moon and Mars so that’s off the list.

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