Canadian consumer debt reached $2.4 trillion, non-mortgage debt showed a seasonal rise in the second quarter of 2023, with credit card balances reaching an all-time high of $107.4 billion, says a report released by Equifax Canada.
“Canadians are demonstrating a shift in their spending habits due to the current economic volatility,” explained Rebecca Oakes, Vice-President of Advanced Analytics at Equifax Canada. “With various factors at play, individuals and households are actively adapting their financial strategies to navigate this dynamic landscape.
“Consumers are becoming more prudent with their credit related decisions. We’ve seen consumers shopping around more for the best mortgage deal at point of renewal and some switching to alternative credit products which may be lower rate to cover the costs of large purchases”
The report said non-mortgage debt continued to grow in Q2 2023, largely due to substantial growth in credit card balances and a notable increase in debt among subprime and deep subprime consumers.
“While record-high credit card balances played a key role, the average non-mortgage debt per credit-active consumer only saw a marginal uptick to $21,131. This increase was masked by the influx of new credit users in Canada who have much lower debt levels when they first become credit active. The number of credit active consumers with less than 24 months of credit activity went up by 37.1 per cent while their average non-mortgage debt went down by 10.2 per cent when compared to Q2 2022. In contrast, consumers with a credit history exceeding two years had an average non-mortgage debt of $22,710, up 1.9 per cent. Mortgage debt showed a modest one per cent increase from Q1 to Q2 2023. Additionally, new credit card originations surpassed 1.5 million in Q2 2023, with an average credit limit near $6,000 for new cards, signaling evolving trends in consumer finance,” said the report.
Credit card spending has been consistently growing since the end of 2021 and is finally starting to slow, partly due to inflation drops and partly due to rising financial pressure from high interest rate credit products. Average monthly credit card spend per credit card consumer increased by 3.7 per cent in Q2 2023 as compared to 22.7 per cent in Q2 2022, said Equifax.
“The slowdown in credit card spend seems to be more prominent among mortgage holders and higher-income segments,” said Oakes. “They may have more flexibility to scale back on discretionary spending to meet their increased credit payment obligations. However, it’s a different story for lower-income households, who are grappling with rising costs and may find it challenging to curb their spending. The divide becomes apparent when we consider savings — those with higher savings can redirect funds to cover fixed expenses like mortgages and auto loans while tightening the reins on variable expenses like credit card spending. Meanwhile, consumers with depleting savings are facing an uphill battle, resulting in a continued uptick in credit card debt.”
But Equifax said the frequency of missed credit card payments is not surging as rapidly as anticipated. This trend can largely be attributed to a significant influx of new credit card users, especially those who are new to credit, which conceals the true extent of credit card payment delinquencies. Despite a 19.8 per cent year-over-year increase in 90+ days balance delinquencies for credit cards, it’s worth noting that they still stand 14.6 per cent below Q2 2019 levels, indicating that missed payments are not escalating as swiftly as expected, it said.
“The impact of recent interest rate hikes on the mortgage market is evident. An increase of 475 basis points in interest rates over just 10 increments initially slowed mortgage originations towards the end of 2022. However, in Q2 2023, there has been a resurgence in new mortgages, driven by higher home sales. The brief dip in home prices has rebounded, as seen in the increased average loan amount for new mortgages compared to the previous quarter,” said the report.
Age Group Analysis – Debt & Delinquency Rates (excluding mortgages)
| Average Debt (Q2 2023) | Average Debt Change Year-over-Year (Q2 2023 vs. Q2 2022) | Delinquency Rate ($) (Q2 2023) | Delinquency Rate ($) Change Year-over-Year (Q2 2023 vs. Q2 2022) | ||
| 18-25 | $7,820 | -3.11% | 1.64% | 18.73% | |
| 26-35 | $17,123 | -0.09% | 1.64% | 28.47% | |
| 36-45 | $26,136 | 1.69% | 1.28% | 31.93% | |
| 46-55 | $32,772 | 1.92% | 0.95% | 32.08% | |
| 56-65 | $26,844 | 0.72% | 0.85% | 30.06% | |
| 65+ | $14,313 | -2.03% | 0.95% | 23.11% | |
| Canada | $21,131 | 0.01% | 1.13% | 29.45% | |
Major City Analysis – Debt & Delinquency Rates (excluding mortgages)
| City | Average Debt (Q2 2023) | Average Debt Change Year-over-Year (Q2 2023 vs. Q2 2022) | Delinquency Rate ($) (Q2 2023) | Delinquency Rate ($) Change Year-over-Year (Q2 2023 vs. Q2 2022) | |
| Calgary | $24,143 | -3.09% | 1.31% | 17.75% | |
| Edmonton | $23,732 | -2.51% | 1.65% | 21.85% | |
| Halifax | $20,828 | -0.77% | 1.24% | 30.41% | |
| Montreal | $16,442 | 0.12% | 1.00% | 32.76% | |
| Ottawa | $19,142 | 1.31% | 1.04% | 32.77% | |
| Toronto | $20,067 | -1.44% | 1.46% | 40.04% | |
| Vancouver | $22,282 | -2.10% | 0.91% | 39.39% | |
| St. John’s | $23,423 | -1.07% | 1.34% | 24.56% | |
| Fort McMurray | $37,549 | -0.24% | 1.94% | 29.68% | |
Province Analysis -Debt & Delinquency Rates (excluding mortgages)
| Province | Average Debt (Q2 2023) | Average Debt Change Year-over-Year (Q2 2023 vs. Q2 2022) | Delinquency Rate ($) (Q2 2023) | Delinquency Rate ($) Change Year-over-Year (Q2 2023 vs. Q2 2022) | |
| Ontario | $21,593 | 0.88% | 1.14% | 37.33% | |
| Quebec | $18,518 | 0.48% | 0.78% | 30.74% | |
| Nova Scotia | $20,613 | -0.43% | 1.43% | 25.21% | |
| New Brunswick | $21,861 | -0.12% | 1.40% | 15.75% | |
| PEI | $22,356 | 0.53% | 0.98% | 20.22% | |
| Newfoundland | $22,980 | 0.31% | 1.39% | 21.24% | |
| Eastern Region | $21,615 | -0.12% | 1.38% | 20.84% | |
| Alberta | $24,439 | -2.46% | 1.48% | 18.18% | |
| Manitoba | $17,047 | 0.54% | 1.45% | 25.91% | |
| Saskatchewan | $22,302 | -1.24% | 1.43% | 13.35% | |
| British Columbia | $21,765 | -0.80% | 1.03% | 34.16% | |
| Western Region | $22,293 | -1.35% | 1.28% | 23.47% | |
| Canada | $21,131 | 0.01% | 1.13% | 29.45% | |
* Based on Equifax data for Q2 2023
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)
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