In Canada, rising delinquencies in both mortgage and non-mortgage debt during the second quarter indicate the strain of high-interest rates on borrowers. Delinquencies for non-mortgage debt increased by 26.3%, with notable jumps in missed payments across various types of loans. Auto loans and home equity lines of credit (HELOCs) are nearly back to pre-pandemic levels, with HELOC payments up by over $200 per month. While mortgage delinquencies are 32.6% higher than last year, they are still 36% lower than pre-pandemic levels. New mortgage originations are being driven by first-time buyers, up 59% from Q1, despite higher interest rates.
Overall, consumer debt in Canada rose by 1.9% to reach $2.4 trillion, primarily due to increased credit card balances. This growth is attributed to “new to credit” consumers, often immigrants, seeking Canadian credit for the first time. These consumers have lower initial debt levels. However, consumers with over two years of credit history saw a 1.9% increase in their average non-mortgage debt to $22,710 compared to the previous year.
Published by Steve Huebl