Consumer debt up, but non-mortgage debt down: Equifax Canada

Credit cards can be seen in this undated image. (File)

TORONTO — Credit rating agency Equifax Canada says total consumer debt increased 2.8 per cent to $1.99 trillion in the second quarter amid a strong recovery in the housing market.

Rising mortgage balances pushed average debt per person to $73,532, up 2.2 per cent from a year ago, despite the economic impact of the COVID-19 pandemic.

"Mortgage activity has withstood the headwinds from COVID and showed the earliest signs of recovery," said Rebecca Oakes, assistant vice-president of advanced analytics.

However, non-mortgage debt decreased three per cent nationally to $23,035 as credit cards, auto loans and lines of credit were impacted by shutdowns in most regions of the country.

Per capita non-mortgage debt was highest in Alberta at $28,261 and lowest in Manitoba at $18,243, but it dropped the most in Alberta and least in New Brunswick.

"Other credit products began to show greenshoots of a bounceback with credit card spending starting to rise in June. Card spending for those not using a payment deferral on their credit card were effectively back to pre-COVID levels by the end of the quarter," Oakes said.

About three million consumers used COVID-related payment deferrals at some point since February, with the 35- to 44-year-old age group having the largest percentage relying on the help at 15.1 per cent and seniors least likely to pursue deferrals at 5.7 per cent.

The delinquency rate -- the percentage of balances where credit users have missed at least three payments -- was 1.24 per cent nationally, up 10.6 per cent from a year ago.

The rate was highest in New Brunswick at 1.8 per cent and lowest in British Columbia at 1.02 per cent.

"Delinquency rates held up relatively well and do not reflect the sharp rise in job losses thanks to the various support mechanisms," Oakes said.

"One in five people utilizing deferred payments were already financially stressed prior to the start of the pandemic. Some of these consumers may find it harder to recover as support mechanisms start to reduce."

This report by The Canadian Press was first published Sept. 3, 2020