Canada

Transunion: Canadian Millennials Are Racking Up Over 2x Debt Over Other Generations

Canada’s Millennials are racking up quite the tab, according to a major credit agency. Transunion Canada released their latest insights on demographic credit trends. Millennials now hold more debt than the Baby Boomer generation, for the first time ever. In fact, they borrowed almost three out of four dollars in debt added to the pile over the past year. This comes as credit tightens, with lenders making fewer loans with smaller balances.

Millennial Rack Up Over $56 Billion In Debt

Millennials represent the vast majority of debt growth. Millennials owe $515.90 billion as of Q2 2019, up 12.33% from a year before. The rise works out to $56.63 billion more debt since last year, representing 74% of all debt added. The segment now represents a larger amount of debt than Boomers for the first time in history. This number is expected to surge as they reach their prime income earning years.

Canadian Debt By Generation

Canadian debt held by generation at Q2 2019, in billions of Canadian dollars.

Source: Transunion, Better Dwelling.

Only two other demographics saw credit growth – Gen X and Gen Z. Gen X held $767.4 billion in debt as of Q2 2019, up 3.4% from last year. Gen Z’s debt hit $24.8 billion in the same quarter, up 50.53% from a year before. Boomers held $514.30 billion in debt and the Silent Generation held $52.50 billion. This represents a decline of 1.8% and 7.45% respectively. As the Gen X ages, their debt consumption is expected to drop. Millennials and Gen Z are going to have to carry a lot more credit growth to maintain the pile.

Canadian Debt By Generation 12 Month Change

The 12 month change in debt held by generation in Q2 2019.

Source: Transunion, Better Dwelling.

Lenders Are Becoming Tighter With Credit Lending

Lenders have begun tightening credit, with fewer originations issued with smaller account sizes. Account originations dropped in nearly all segments, with growth in only one. Mortgages were hit with the biggest drop at just 159,000 in Q1 2019, down 8.9% from last year. Consumer credit cards followed with 1,519,000 in the same quarter, down 5.2% from last year. Auto loans came in third with 192,000 originations, down 1.55% from last year. Only one segment grew – lines of credit (LOCs). LOCs saw 337,000 originations in Q1 2019, up 13.9% from last year. All other segments contracted.

Canadian Debt By Originations

The percent change in loans originated by credit product in Q1 2019, compared to last year.

Source: Transunion, Better Dwelling.

Smaller loan sizes were also a trend, with only two segments showing growth. LOC originations had the largest declines with an average new account limit of $42,004 in Q1 2019, down 19.7% from last year. Installment loans followed with an average limit of $21,619, down 5.7% from last year. Mortgages made the third largest decline with an average limit of $276,579, down 3.6% from last year.

The two segments that did see growth are auto loans and consumer credit cards. Auto loans saw the average limit on new originations reach $31,724 in Q1 2019, up 1.9% from last year. Consumer credit cards made a small increase to $4,739, up 0.8% from last year. Both increases weren’t even the size of inflation.

Canadian Debt By Origination Loan Size

The percent change in the limit of loans originated by credit product in Q1 2019, compared to last year.

Source: Transunion, Better Dwelling.

Credit growth is shifting to Millennials, which are approaching their prime borrowing years. This can be problematic, since it’s a demographic already heavily in debt – and light on assets. It’s also a smaller segment than Boomers and Gen X, with Gen Z even smaller than Millennials. This means credit growth is going to have to be made up in volume. Oh boy.

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16 Comments

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  • Travis Hunter 4 weeks ago

    I know. Negative rates are how they can carry everyone! lol. Canada is so screwed.

  • Rob 4 weeks ago

    In 2015 Canada crossed the dependency rate. There are now more people not working than there are working. That means it’s a welfare state by definition, and requires less than half the population to continue to carry more than half of services.

    Even if you stripped all services, each worker needs to pay the taxes for two people. This is only going to get worse in Canada. Millennials are already the second biggest holders of debt, with a smaller size and fewer property owners. That’s CRAZY to think about.

  • Fraser 4 weeks ago

    Poor Canada, what a mess…this will not end well.

  • Fraser 4 weeks ago

    Red, Blue, Liberal, Conservative, almost one and the same…come on, what a joke, all mainstream parties…all have added to our debt, and all have grown the size of government… greedy, greedy, over paid public sector parasites, baby boomers destroying our country…Over 6 decades of greed, corruption, massive government growth and debt, all started under daddy, Trudeau Sr and his crooked, corrupt quebec cronies and all who have followed…100’s of billions stolen out of Ottawa and funneled into quebec and other franco towns, and companies, all across the country…all disguised as grants, subsides, equalization, bilingualism – only outside quebec (code for french) while quebec bans our language, a la bills 22, 178, 101… nice eh ? – all really legal theft…change the laws, steal more money, this is what they did and are doing right now, daily…most people have no idea what happened to this country when Quebec, Trudeau, Lalonde… took over Ottawa = corruption, fraud, money laundering, every day, every way = government…follow the money folks, follow the money…french power $$$, follow the money…in all provinces. People really have no idea who took control of the country and what has been done to us over the last 60 years…..thanks Trudeau #1, and his crooked, corrupt quebec cronies, scary indeed…And until we repeal the very expensive laws/departments – the charter, equalization, bilingualism (code for french), multiculturalism, a dreadful immigration policy (allowing all sorts of tax sucking leeches, parasites into the country)…the damage will continue…this did not begin overnight, decades of it…follow the money…look at a debt chart from the 60’s to today…what a mess…

  • CanadaSucks 4 weeks ago

    It is a debt ponzi scheme. Bank have to keep lending otherwise they will collapse. It will continue until it cannot.

    • Jin 4 weeks ago

      Part of the issue being central banks shifting to a system of perpetual inflation, so they need to keep buying assets (such as government bonds and mortgage bonds) to continue to offset it.

      The Bank of Canada has a reckless mandate.

  • DB 4 weeks ago

    Not a problem I have complete faith in my Gov’t and its institutions and our banks and our homes and in our western way of life…Said no one.
    its unfortunate this statement is not true..there are people who believe this crap.

  • Ryan 4 weeks ago

    I know a single mother of 5 kids that hasn’t worked in years, but goes on amazing vacations around the world with her family every couple months, drives a luxury SUV, and has all the junk/clothes/toys you can think of.

    She was lucky to have inherited a house in the GTA that is probably worth close to $800,000. Instead of living rent free, working to pay the bills, and setting herself up for a good future, she chose to instead “pay” herself from child support and tapping into a HELOC constantly. She is maxed out on her HELOC, until her home valuation goes up, and she can “pay” herself again.

    I assume thousands, if not a million, Canadians are living and getting by this way…

  • Average Man 4 weeks ago

    The silver lining here is that global warming means we don’t actually have to worry about how we’re gonna pay it back.

    • vnm 4 weeks ago

      This is true. Kids today are borrowing and spending like there’s no tomorrow!

  • Frost 4 weeks ago

    Hey how else are you supposed to get the latest $2000 phone? After all you are a “looser” unless you have the latest phone and a 3 series BMW lease. It’s totally sustainable, it’s not like menials have student loans to pay off for a degree in uselessness to make mom and dad proud so they can in turn brag to their baby boomer friends over the BBQ (or church). Because you need that degree in finance along with 80K in student loan debt so you can manage money. Over saturation of degrees yielded them useless. Soon car wash places will require them. After all, if you are an employer, you want the most educated people (knee deep in debt) to work for you (guaranteed slaves for life). Try finding good work if you are FI (financially independent), good luck!

    • Average Man 4 weeks ago

      If you’re financially independent, why do you need to work at all?

  • Zenity 4 weeks ago

    Hey when they tax you to keep boomers alive and force you to spend your remaining income on jacked up housing costs (which is a necessity) what can you do? To defend your dignity and to feed ur family you can only take on debt. What kind of life is this? Ask yourself this, this is fair? what are you going to do about it?

    • Average Man 4 weeks ago

      “when they tax you to keep boomers alive”

      Did you know there are now more Millennials than Boomers? We can outvote them, particularly if we bring Gen X onside. Someone needs to run on “not keeping Boomers alive.”

  • Millennial Whinger 4 weeks ago

    This really isn’t a big deal. Millennials are in their peak purchasing years while boomers slowed down on purchases years ago. People buy more new clothes, tech, fancy cars, etc, while they are in their youthful years. This isn’t some new trend. Younger generations always spend more than older, and borrow to do it.

    Now to those who question what generation I belong to; I’m absolutely a millennial. I do seem to be a bit more woke than the average, but still a millennial. Many of you need to get over this inter generational hate and move on with life. Things are as they are, don’t sit around expecting the world to change to your benefit because you want it. Go do something positive.

  • Rana 4 weeks ago

    It’s time for govt to lose the lending and take house prices 15%up so that vacation can continue

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