Consumer debt increases with renewal of mortgage activity

TORONTO, Sep 03, 2020 (GLOBE NEWSWIRE) – Despite the economic impact of COVID-19, a strong recovery in the Canadian housing market and slower repayment of existing mortgages have helped push total debt down by consumers to $ 1.991 trillion in the second quarter, according to Equifax Canada’s most recent report on consumer credit conditions. Consumer debt is up 2.8% compared to the same quarter in 2019.

Rising mortgage balances helped push average debt per person to $ 73,532, up 2.2% from the second quarter of 2019. Mortgages were supported by a rebound in home sales relative to pandemic lows in March and April, as well as increased refinancing activity and a higher average home. prices. Non-mortgage debt was down from 2019 as credit cards, auto loans and lines of credit were hit by the economic shutdown in most regions.

“Mortgage activity has weathered the headwinds of COVID and has shown the first signs of recovery,” said Rebecca Oakes, assistant vice president of advanced analytics at Equifax Canada. “Other credit products have started to show rebounding green shoots, with credit card spending starting to increase in June. Card spending for those not using deferral on their credit card had effectively returned to pre-COVID levels by the end of the quarter. ”

The use of support mechanisms during the COVID-19 pandemic has become widespread with more than three million consumers using COVID-related payment hosting at some point since February. The 35 to 44 age group was the heaviest user, with 15.1 percent using some form of deferral, compared to just 5.7 percent for seniors. Deferrals have declined in recent weeks.

“Everyone’s situation is different. Some consumers who felt financial stress before the pandemic have shown improved credit behavior since March and can take advantage of deferrals to help pay off outstanding debts, ”Oakes added. “There remains one group that is feeling the financial stress of the pandemic and reporting more missed payments. ”

Impact of the pandemic on insolvencies and bankruptcies

The 90-day or more default rate (the percentage of balances where credit users missed more than 3 payments) for non-mortgage debt was 1.24% (10.6% higher than in Q2 2019 ). This continues a trend of 2019 and does not measure the full weight of COVID. Younger borrowers saw a decline in the overall default rate compared to the first quarter, but this may reflect the increased use of payment deferrals and government support benefits.

“The delinquency rates have held up relatively well and do not reflect the sharp increase in job cuts through the various support mechanisms,” Oakes concluded. “One in five people using deferred payments was already in financial difficulty before the start of the pandemic. Some of these consumers may have a harder time recovering as the support mechanisms begin to shrink. ”

Debt (excluding mortgages) and default rate

Age Mean
Debt
(Q2 2020)
Average change in debt
Year after year
(Q2 2020 vs. Q2 2019)
Delinquency rate
(Q2 2020)
Change in failure rate
Year after year
(Q2 2020 vs. Q2 2019)
18-25 $ 8,532 -0.94 % 1.73 % 2.35 %
26-35 $ 17,596 -3.31 % 1.73 % 8.37 %
36-45 $ 27,669 -3.90 % 1.41 % 10.85 %
46-55 $ 35,135 -2.36 % 1.08 % 13.00 %
56-65 $ 29,611 -2.15 % 0.95 % 11.86 %
65+ $ 16,074 -2.87 % 1.10 % 12.11 %
Canada $23,035 -3.00 % 1.24 % 10.62 %

Big city analysis – Debt (excluding mortgages) & Delinquency rate

City Mean
Debt
(Q2 2020)
Average change in debt
Year after year
(Q2 2020 vs. Q2 2019)
Delinquency rate
(Q2 2020)
Change in failure rate
Year after year
(Q2 2020 vs. Q2 2019)
Calgary $ 28,890 -3.64 % 1.46 % 12.54 %
Edmonton $ 27,571 -4.23 % 1.72 % 15.68 %
Halifax $ 22,790 -3.69 % 1.47 % -4.79 %
Montreal $ 17,053 -5.07 % 1.33 % 11.73 %
Ottawa $ 21,819 -4.66 % 1.04 % 13.43 %
Toronto $ 22,651 -3.08 % 1.34 % 13.79 %
Vancouver $ 25,940 -3.13 % 0.86 % 14.78 %
St. John’s $ 24,775 -2.67 % 1.65 % -3.17 %
Fort McMurray $ 39,142 -0.82 % 2.09 % 19.59 %

Provincial analysis – Debt (excluding mortgages) & Delinquency rate & Arkansas Bankruptcy amount

Province Mean
Debt
(Q2 2020)
Average change in debt
Year after year
(Q2 2020 vs. Q2 2019)
Delinquency rate
(Q2 2020)
Change in failure rate
Year after year
(Q2 2020 vs. Q2 2019)
Ontario $ 23,663 -2.75 % 1.13 % 12.83 %
Quebec $ 19,054 -3.14 % 1.08 % 9.58 %
New Scotland $ 22,019 -2.67 % 1.71 % -3.08 %
New Brunswick $ 23,324 -1.69 % 1.80 % -1.46 %
PEI $ 22,728 -2.08 % 1.18 % -9.81 %
Newfoundland $ 23,452 -1.95 % 1.75 % -4.78 %
eastern region $22 782 -2.17 % 1.71 % -3.28 %
Alberta $ 28,261 -3.84 % 1.63 % 13.78 %
Manitoba $ 18,243 -3.58 % 1.50 % 8.68 %
Saskatchewan $ 23,984 -3.59 % 1.61 % 5.77 %
British Columbia $ 24,289 -2.96 % 1.02 % 15.03 %
Western region $25,063 -3.42 % 1.36 % 12.63 %
Canada $23,035 -3.00 % 1.24 % 10.62 %

* Based on Equifax data for Q2 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 confidence. Our unique blend of differentiated data, analytics, and cloud technologies generate insights that are useful in making decisions and moving people forward. 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.

Contact:

Andrew Findlater
SELECT Public Relations
[email protected]
(647) 444-1197

Equifax Canada Media Relations
[email protected]

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