Canadian consumer debt hits all-time high, reaching $2.32 trillion in Q1 2023: TransUnion
Amid rate of interest hikes and excessive inflation, extra Canadians are turning to credit score for reduction, with client debt hitting a brand new report within the first quarter of 2023.
In a brand new report launched Wednesday by TransUnion, the quantity of excellent debt that Canadians have amassed throughout all credit score merchandise has reached a brand new report of $2.32 trillion.
The variety of Canadians with entry to credit score elevated to 30.6 million, which is up 2.9 per cent from final yr. Among present credit score debt, the amount of customers including extra credit score merchandise elevated by 6.2 per cent. TransUnion says that is being pushed by Gen Z customers coming into the credit score market and new Canadians.
Higher credit score balances drove minimal month-to-month funds larger and put stress on customers to make use of extra disposable revenue to cowl funds specifically mortgages and contours of credit score—that are susceptible to rate of interest adjustments.
The common line of credit score month-to-month fee elevated to $436, a 43 per cent enhance yr over yr. While the typical month-to-month mortgage fee rose to $2,032, a 15 per cent enhance yr over yr.
The common fee for bank cards was 2.6 occasions over the minimal required. “This is a positive sign indicating healthy consumer behaviors towards their payment obligations,” mentioned TransUnion’s press launch.
The proportion of customers overdue on any account for 90 days or extra, additionally referred to credit score delinquency, elevated by 9 foundation factors to 1.57 per cent. The report notes that regardless of the rise, general delinquency ranges stay beneath pre-pandemic ranges.
“As available disposable incomes become more stretched, we expect a segment of consumers will be more likely to miss payments, and as a result, that delinquency rates will rise,” mentioned Matt Fabian, director of monetary companies analysis and consulting at TransUnion in Canada, in a press launch Wednesday. “However, we expect any rise in delinquency rates to be moderate and in line with increased credit activity.”
TransUnions says it expects delinquency charges in Q1 of 2024 to be again to pre-pandemic ranges at 2.19 per cent.
“Overall, the financial position of Canadian credit consumers improved coming out of the pandemic, bolstered by higher savings accumulated through the pandemic and supported by a strong labour market,” added Fabian.
