(TORONTO) Canadians’ combined debt stock set a new record in the first quarter, hitting $2.32 trillion, TransUnion said Wednesday.
Many Canadians have turned to credit to ease financial pressures at a time when the cost of living is rising with high inflation and rising interest rates, the rating agency noted in its most recent quarterly report. on industry data.
TransUnion says the number of Canadians with access to credit increased by 2.9% year over year, due to the number of at-risk consumers, which increased by 8.3%.
However, the agency noted that consumers considered “prime and better” still accounted for nearly three-quarters of total consumers with a balance, calling this a “relatively healthy distribution of risk.”
Credit card issuance increased 20% amid strong market competition, while the average monthly line of credit payment increased 43% to $436.
Mortgage origination fell 32% year-over-year, according to TransUnion, as rising interest rates slowed demand for new mortgages, particularly in the refinance market.
Meanwhile, the rate of serious consumer delinquency has increased, although TransUnion noted that overall levels of delinquency remain below pre-pandemic levels.
“The financial situation of Canadian credit consumers has improved in the wake of the pandemic thanks to the increase in savings accumulated during the pandemic and the strength of the job market,” said the director of research and TransUnion industry data, Matthew Fabian.
“However, the longer current inflation and high interest rate conditions continue, the more likely it is that a more vulnerable consumer segment will be cash-strapped,” he added.
“As disposable incomes are increasingly constrained, we expect a segment of consumers to be more inclined to miss [their] payments and, as a result, delinquency rates to increase. »
Average consumer balances on most credit products increased, with the average credit card balance increasing 11.4% to $3,909 and mortgages increasing 7.1% to $349,178 .
TransUnion expects credit trends for 2023 to be mixed due to the uneven impact of rising inflation and interest rates.