TransUnion: Canadian Non-Mortgage Credit Delinquencies Soar To 2015 Levels

Canadian lenders have been granting credit payment deferrals by the hundreds of thousands. Somehow, that’s not quite enough to deter delinquencies. TransUnion data shows a significant uptick in delinquencies for non-mortgage credit in Q1 2020. The increase brings the country to the highest level of delinquencies in half a decade.

Canadian Non-Mortgage Credit Delinquencies Reach Highest Level Since 2015

The number of non-mortgage credit accounts over 90 days past due is rising fast. About 5.75% of non-mortgage credit accounts in Q1 2020 were delinquent, up 2.48% from the previous quarter. This represents an increase of 7.21% compared to the same quarter last year. That is the highest this number has been since at least 2015.

Canadian Non-Mortgage Credit Delinquencies

The percent of non-mortgage accounts more than 90 days overdue.

Source: TransUnion, Better Dwelling.

Ontario Credit Delinquencies Reach 5.35%

Ontario households are falling behind as well, reaching the highest level in a few years. About 5.35% of non-mortgage credit accounts in Q1 2020 became delinquent, up 2.22% from the previous quarter. This represents an increase of 5.56% compared to the same quarter last year. Ontario last saw this level in Q3 2017, but the rate was heading in the opposite direction.

BC Credit Delinquencies Hit 5.86%

British Columbia is seeing non-mortgage delinquencies rise to the highest level in years. About 5.86% of non-mortgage credit accounts became delinquent in Q1 2020, up 2.53% from the previous quarter. This represents an increase of 5.56% compared to the same quarter last year. The annual growth is above the national average, with the share of delinquent accounts reaching the highest level since 2015.

Quebec Credit Delinquencies Rise To 4.5% of Accounts

Quebec is seeing lower than average growth for delinquencies on non-mortgage credit accounts. About 4.55% of non-mortgage credit accounts became delinquent in Q1 2020, up 2.28% from the previous quarter. This represents an increase of 5.23% compared to the same month last year. This is the highest the rate has been since… you guessed it, 2015.

The increase in non-mortgage credit delinquencies is somewhat of a surprise. Banks have been deferring payments, and lowering interest rates specifically to avoid this. Even with the hundreds of thousands of deferrals, some people are having trouble managing their credit. TransUnion expects this segment to continue to rise, ahead of an increase in mortgage delinquencies. Typically households will default on non-mortgage credit before mortgage credit.

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  • Marc 3 years ago

    Canada had to restructure the whole economy and get emergency funds to prevent credit from collapsing on households. There’s no chance this wasn’t coming.

    • Trader Jim 3 years ago

      Or worse – they won’t let people default, and it’s just a drag on economic growth.

      Defaults aren’t the bad news it sounds like. It helps purge inefficient facilities. This is why rich people default often, and lower income people struggle with payments on bad spending.

  • Yusef 3 years ago

    Bad credit should be purged, not defaulted on. Why not file a consumer proposal if you know it’s getting past 30 days?

    • Daryl Brown 3 years ago

      Because people believe they’re always just a short windfall of not needing any help?

  • Daryl Brown 3 years ago

    Canada is doing something interesting with credit. It is extending a ton of housing credit, and as soon as the pandemic hit, they extended a ton of credit to businesses.

    The government is guaranteeing the whole thing, which is pretty much a combination of the US’s 2008 housing credit bubble with the 2020 corporate bubble.

  • straw walker 3 years ago

    Not surprising BC leads the packs as most of Vancouver lifestyles are supported by HELOC loans..

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