Seniors continue to drive increase in delinquencies

Equifax says that credit usage is rising but most people are coping

Seniors continue to drive increase in delinquencies
Steve Randall

There has been a further increase in consumer credit delinquencies and Canada’s seniors are right at the heart of it.

A new report from Equifax Canada shows that the 90-day delinquency rate increased 3.5% year-over-year in the first quarter of 2019 to an overall rate of 1.2%. But among seniors, the rate jumped 9.4% year-over-year.

Overall, Newfoundland posted the largest increase (10%) followed by New Brunswick (7.8%) and Manitoba (6.1%). BC (5.4%) and Ontario (3.6%) reported the first significant increase in their delinquency in at least 5 years.

There was a 4% increase in the 90-day mortgage delinquency rate but this remains very low at just 0.18%.

“We continue to see signs of increasing strain for Canadian borrowers. The utilization of credit cards has been trending higher and gaining momentum,” added Johnston. “With more consumers growing their average debt, we expect to see further increases in delinquencies in the coming months.”

Credit usage growing

The report shows that Canadians are still highly reliant on borrowing with the average debt per Canadian consumer (including mortgages) rising 2.6% year-over-year to $71,300 in the first quarter of 2019.

There was a seasonal peak of 33.9% for those with increased credit balances compared to the previous year.

Total consumer debt including mortgages increased to $1.907 trillion in Q1, compared to $1.823 trillion in Q1 2018 (+4.3%).

Total mortgage outstandings rose 4% to $1.278 trillion while non-mortgage debt was up 4.9% compared to 2018, as longer terms on auto and bank loans have consumers paying down their balances slower.

“Consumers were opening fewer new credit products in early 2019, but they certainly weren’t curtailing the use of their existing credit,” said Bill Johnston, Vice President of Data & Analytics at Equifax Canada. “Loans are taking longer to pay down and credit card use is on the rise. The headline numbers for non-mortgage debt had been driven by population growth for the past 18 months, but it was increased usage that drove the rise in credit during the first quarter of this year.”