(Toronto) A new report from TransUnion shows a steady increase in borrowing activity among Canadians in the second quarter as they face a higher cost of living.

While the number of consumers increasing their credit balances increased across the board, the report found that the riskiest segment, subprime borrowers, saw their balances increase the most, at 8.9% year-over-year.

According to TransUnion, these larger average credit balances among consumers could be attributed to higher spending habits and high interest rates on variable-rate loans, which eat into household budgets.

Demand for new borrowing is up 17% from a year ago, TransUnion said.

The combined pressure of inflation and rising interest rates has created a payments shock, said Matthew Fabian, director of research and financial services consulting at TransUnion.

The document says total Canadian household debt hit $2.3 trillion in the second quarter, up 4.2% from a year ago, largely due to mortgage debt.