The average Torontonian has less personal consumer debt ($19,780, excluding mortgages) than residents of most other cities in Canada. As well, the average Toronto borrower pays his or her bills on time. The rate of delinquency on consumer debt, which includes credit cards, auto loans and installment-type loan payments, dropped by 13.2 per cent in Toronto in the third quarter of 2015, compared to one year ago. Ontario has the third-lowest level of personal debt of all provinces in the country, at $20,881. Only Quebecers and Manitobans owe less.
Calgarians, on the other hand, have been piling on the debt and having more trouble paying it off. Calgarians had the highest average personal debt ($28,355) in the country, according to consumer credit information company Equifax. They are also contending with higher unemployment and falling property values. Delinquencies in Calgary were up 8.5 per cent. The story is similar in Edmonton and in Newfoundland and Labrador. Bankruptcies also increased in those provinces, though they were down overall in Canada.
Even with the increased delinquency rates in Alberta, Saskatchewan and Newfoundland, whose economies have been negatively impacted by oil, the national rate is at its lowest ever, Equifax says. Just over 1 per cent of consumers nationally have fallen behind in their credit card or car loan payments. That rate is down by about 4 per cent from one year ago.
Consumer debt continues to increase, driven largely by the Auto and Installment loan product categories. Low interest rates which resulted from two consecutive deceases of the overnight interest rate by the central bank continue to help consumers to responsibly maintain increasing debt levels and to contribute to GDP growth.
While bankruptcies and delinquency rates remain stable, they are “lagging indicators,” Equifax says, and more significant changes are expected to show up if the economic situation does not improve. Impacts for oil-producing regions like Alberta are expected to become more “obvious.” Unemployment in Alberta and Saskatchewan is expected to increase.
In all, Canadians owe more than $1.5 trillion, of which about $1 trillion is mortgage debt. The Canadian average non-mortgage debt is $21,132, up 2 per cent from the same time last year. Canada’s car makers and dealers have been reporting record-high sales for the past several months, and their good fortune is reflected in an 8 per cent increase in car loans. Mortgage borrowing was also up 6 per cent in the third quarter.
The low cost of borrowing has been a huge support for all the consumer spending. The Bank of Canada announced today that the overnight rate will remain where it has been since last July, at 0.5 per cent.
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