While mortgage debts go up, credit card debts drop to 2015 levels

The recent report by Equifax Canada shows that hot real estate market has led to a 41.2% year-over-year rise in new mortgages in the first quarter of 2021.

In addition to it, the average mortgage amount was up by 20.5% to $326,903.

“Low interest rates and concerns over U.S. inflation affecting our interest rates have led to mortgage volumes growth in Canada, as consumers are afraid of the future rate increases,” – Rebecca Oakes from Equifax Canada says. “We’ve seen extreme competition among homebuyers in many markets across the country. We’ll keep watching closely, whether [OSFI’s] new mortgage stress test helps to cool down the hot real estate market.”

The pent-up mortgage demand pushed national consumer debt to $2.08 trillion, marking a 0.62% gain from the previous quarter and a 4.78% hike from a Q1 2020.

In the meantime, a pandemic-caused decline in spending led to credit card debt falling to 2015 levels. According to Equifax, credit card balances were down by about 9.9% on a year-over-year basis. “Although deferral programs have come to an end in most cases, government support remains, helping Canadians to pay down their credit card debts,” – Oakes noted.

Today, the average consumer non-mortgage debt is $20,430, showing a 4.2% annual decline.