Consumer Debt in Canada Grows to More Than $1.4 Trillion

The 2013 fourth-quarter increase occurred at the same time the national loan delinquency rate reached a record low.

Consumer debt in Canada reached more than $1.4 trillion in the fourth quarter of 2013, in part due to increases in the installment loan and credit card sectors, according to Equifax Canada’s Q4 National Consumer Credit Trends Report.

The end-of-year consumer debt marked a 4.5 percent increase from the third quarter amount of $1.36 trillion. Installment loans increased 11 percent year-over-year and there was a 5.9 percent increase in the credit card sector, according to Equifax. However, the national delinquency rate in Canada reached a new record low of 1.12 percent.

“The growing debt is an important indicator of the state of the consumer financial health, and should not be dismissed,” said Regina Malina, the Equifax Canada director of modeling and analytics. “But for the most part, consumers and lenders continue to be responsible in how they’re using credit. In short, monthly payments are being made.”

On a regional basis, Quebec has the lowest delinquency rate (.98 percent) on nonmortgage loans, while the Eastern region has the highest rate (1.42 percent.)

Calgary and Edmonton had the strongest payment performance with less than 1 percent of loans delinquent by 90 days or more. Toronto, with the worst performance among major cities, had a 1.5 percent delinquency rate in the fourth quarter of last year.

While it has a low loan delinquency rate, Edmonton has the highest year-over-year increase in average debt (5.3 percent), according to Equifax. The average debt in Vancouver decreased substantially by 4.4 percent.

“Consumer credit trends are expected to remain strong throughout the year as an expanding U.S. economy increases demand for Canadian exports,” said Cristian deRitis, senior director of consumer credit economics at Moody’s Analytics, about the Equifax report. “Interest rates are expected to remain relatively low throughout 2014, rising gradually in 2015 and 2016 as both the Canadian and U.S. economies gather steam. This transition period should allow consumers to adjust their spending habits while continuing to make their debt payments.”

Source: ACA