Canadians are piling more credit because of financial challenges

The latest report for the fourth quarter of 2022 by TransUnion shows that Canadians are piling more credit as a result of financial pressures and economic uncertainties they are facing right now, as they are increasingly struggling to make their payments on time.

The report says the health of Canada’s credit market has stayed unchanged at pre-pandemic levels. Nevertheless, delinquency or late payments “rose significantly during the previous three quarters.”

“We can see the growing usage of credit, as some consumers choose credit to withstand the current financial pressures,”- Matt Fabian from TransUnion noted.

The report reviewed credit data from more than 29 million Canadians. TransUnion determines the credit market health with its Credit Industry Indicator (CII), based on demand, supply, consumer behaviour and performance. Canada’s CII was up by 4 points annually in December 2022 and reached 105, marking the same range as we’ve seen before the pandemic.

The main drivers of the gain were high credit participation and larger consumer balances.

Credit participation went up in all provinces with the largest increase by 3.2% reported in Ontario, as borrowers searched for various credit products in order to withstand the financial pressures.

According to the report, mortgage originations were down by 18% from a year earlier. In addition to it, demand for mortgage refinancing also fell due to the latest interest rate hikes, as “most consumers who were eligible for refinancing have already benefited from it.”

Although housing prices are going down, the report says that interest rate increases have risen the amount of minimum payment and “put Canadian homeowners under even more pressure.” In fact, mortgage payments were up by an average of 17% annually.

We want to reaffirm our commitment to the hundreds of Canadian homeowners we help each year by consolidating credit card and high interest debt into one affordable mortgage payment and freeing up extra money for everyday expenses. This is especially important today, in an era of growing unsecure debt and a sharp rise in the cost of living.