More Canadians are missing credit payments, with missed payments on non-mortgage debt returning to pre-pandemic levels, according to a new report from Equifax Canada.
The latest Market Pulse Consumer Credit Trends and Insights Report showed that consumer debt rose to $2.46 trillion at the end of the first quarter of 2024, increasing by 3.5% from last year.
“These are challenging economic conditions, and as financial stress increases, we are seeing consumers adapting their credit decisions to help manage through this period,” said Rebecca Oakes, vice president of advanced analytics at Equifax Canada.
She added that consumers are extending their mortgage lengths to pay less in the short term despite losing more money to interest over the long term. People are also switching lenders more frequently to find better deals and checking their credit scores more often, with Equifax Canada noting a 19% rise in credit checks compared to the same period last year.
In the first quarter of 2024, more than 1.26 million Canadians missed at least one payment on a credit commitment, the highest level since 2020 and a 12.2% increase compared to 2023’s first quarter, increasing by 137,358 consumers.
British Columbia, Ontario, and Quebec were hit harder than other provinces, seeing 13.4%, 14.6%, and 15.2% jumps in missed payments between 2023 and 2024.
Equifax’s report analyzed the average debt and delinquency rates by age groups, cities, and provinces.
While much of the data excluded mortgage payments, 34,000 Canadians missed a payment on their mortgage in the first quarter of 2024, an increase of 22.7% since 2023.
“It’s not just homeowners feeling the strain. Whether you own or rent, the high cost of living remains a heavy burden for many,” said Oakes.
The average Canadian had $21,276 in debt, excluding their mortgages, an increase of 1.77% since 2023. Canadians aged 46-55 had the most debt, an average of $33,391, increasing 3.33% since last year. Canadians aged 18-25 had the least amount of debt, averaging $8,085, an increase of 2.39% since 2023.
Debt increases outside of mortgage can be largely attributed to missed auto loans and credit payments.
In March, more Canadians said they would default on making payments on major loans or a mortgage, tying the highest level ever in Sept. 2023.
Alberta is the province where consumers have the highest average debt, with an average of $24,157 in debt excluding their mortgages, a decrease of 0.69% since 2023.
The least indebted Canadians live in Manitoba, where they have an average of $17,527 in debt outside of their mortgages, increasing 4.29% since last year — the biggest increase among provinces, eclipsed only by Newfoundland, where average consumer debt increased by 4.75%.
While consumers have been hit hard, so too have businesses. Business insolvencies in Canada increased 87.2% between the first quarter of 2023 and 2024, reaching a rate not seen in 37 years.
In Ontario, mortgage balances reaching severe delinquency, where residents go 90 or more days without paying down their mortgage balance, have doubled since before the pandemic, exceeding $1 billion for the first time.
Mortgage debt in Canada represents 74.4% of total consumer debt. Originations of new mortgages hit an all-time low in the first quarter of 2024, refinancing levels fell 2.6%, and first-time home buyers dropped by 10% year-over-year.
Despite much of Canada’s housing market showing struggles, Alberta saw a 10.6% increase in new mortgage originations, largely driven by interprovincial migration due to housing affordability. Alberta continuously leads in interprovincial migration.
“More consumers are making the decision to relocate to more financially accessible regions,” said Oakes. “In the last 12 months, the number of individuals who moved from Ontario and British Columbia to other provinces exceeded those who moved to Ontario. Almost 71% of all interprovincial movement to Alberta came from those two provinces alone.”
The city with the most indebted citizens highlighted by Equifax Canada was in Alberta. Residents of Fort McMurray have an average debt of $36,970, excluding their mortgages, decreasing 0.47% since last year. The least indebted citizens in highlighted cities reside in Montreal, where the average debt excluding mortgage debt for residents was $16,548, an increase of 1.65% since last year.
While rising debt is an issue for many Canadians, more and more are struggling to even pay the minimum amount on credit bills.