Canadian consumers increased their debt burdens in the past year despite new efforts by regulators to tighten lending standards in the country, according to Equifax Canada's Q2 2013 National Consumer Credit Trends Report.
The 90-day delinquency rate, however, in the past three years, fell to a record low 1.19%. Total debt rose by nearly $77 billion, or 6.1%, from last year's level driven by an 8.6% jump in auto loan balances and a 7.4% increase in outstanding mortgage debt.
The Equifax Report also revealed that average debt for consumers 65 and over shows the greatest year-over-year increase in all age groups at 6.5%.
Cristian deRitis, senior director of Consumer Credit Economics at Moody's Analytics, commented on the Equifax report, stating that an "increased demand for credit outside of mortgages is positive for the economy in the short term but could limit the ability of over-extended consumers to react to any financial bumps in the road in the future."
Regina Malina, director, Modeling & Analytics, Equifax Canada, commented that "as the fears of another recession slowly subside, consumers continue to accumulate high levels of debt but with more fiscal responsibility."
The report also contains mortgage debt and delinquency trends.
Mortgage portfolio highlights include:
The 90-day delinquency rate for mortgages shows a 19.2% decrease from the same period last year, which could be the result of the tighter mortgage lending rules introduced in July 2012.
Mortgage portfolios are growing at a robust pace, an increase of 7.4% over the same period last year.
Average mortgage balances are showing small but steady increases: $162,985 vs. $168,387 (Q2/12 vs. Q2/13 respectively).
Serious delinquency rates are stable across lending products as well as provinces. Toronto has the highest delinquency rate among major Metropolitan Areas at 1.56 per cent of non-mortgage balances but has continuously improved since hitting a peak of 2.53 per cent in 2010. The fraction of mortgage loans that were 90 or more days delinquent fell to 0.27 per cent in the second quarter from 0.33 per cent a year ago.
"Stable home prices and improvements in the labour market should continue to support the market in the future, while the outlook for consumer credit remains positive," added deRitis. "A sudden rise in interest rates or deterioration in fundamentals in key export markets are risks to this forecast however."