Total consumer debt amount exceeds $2 trillion in Canada

The recent quarterly report by Equifax Canada shows that a total amount of consumer debt in Canada exceeded $2 trillion this fall. The main drivers of such an increase were mortgages and car loans.

According to Equifax, the total consumer debt was up by 3.8% annually and reached $2.041 trillion in Q3.

“Homebuyers are the main reason of it,” – Rebecca Oakes, assistant vice president of advanced analytics at Equifax Canada, noted.

“Car sales also showed a strong recovery over the previous few months. Because of manufacturer and auction houses’ shutdowns, we’ve faced a temporary lack of vehicle availability in certain regions.”

Mortgage balances showed an annual gain by 6.6%, and new car loans rose by 11.7%. At the same time, the average credit card spending almost returned to its pre-pandemic level.

Although the 90-day delinquency rate for non-mortgage debt went down to 0.98%, marking the lowest level since 2014, Equifax pointed to certain points of concern.

​“The current low delinquency rates may be explained mostly by deferral programs,” – Oakes says, adding that deferral programs were used by more than three million consumers since the beginning of the pandemic.

“There are certain warning signs of early-stage delinquency on credit cards, when consumers miss one or two payments.”

Equifax says 12% of new credit products in the third-quarter were used by those who benefitted from a deferral program.