Canadians have record debt but appear to be managing

However, fewer people are carrying larger loads

Canadians have record debt but appear to be managing

Canadian personal debt increased to a new record high in the fourth quarter of 2017 even as many people reduced their borrowing.

Equifax says that while 46% of Canadians reduced their personal debt, the 37% who increased it borrowed larger amounts.

Overall debt including mortgages rose to $1.821 trillion, up 1.3% from the previous quarter and up 6% from the end of 2016. Mortgage debt was up 6.2%, auto loans up 6.5%, and instalment loans increased 10.3% year-over-year.

The rise in debt to an average $22,837 per person (3.3% increase) comes as the level of delinquencies and bankruptcies is falling.

The 90+ delinquency rate declined by 6.4% and consumer bankruptcies edged lower by 1.7% nationally, although consumers in Newfoundland and Saskatchewan continue to struggle with both delinquencies and bankruptcies, as Alberta recovers.

 “Despite the high debt, mortgage payments are generally on time, which could be attributed to low unemployment numbers and mortgage and auto finance interest rates which are still at historically low and reasonable levels,” said Regina Malina, Senior Director of Decision Insights at Equifax Canada. “As the new mortgage rules begin to impact approval rates, there may be a shift in the profile of mortgage customers, and activity in the real estate market, but at this point most people are managing their payments.”

All age groups are recording fewer delinquencies and bankruptcies, but those under 25 are showing a notable decrease.