More people in Alberta struggling with debt, report finds

More Albertans will fall behind on paying their credit cards and non-mortgage debts this year due to COVID-19 and plummeting oil prices, Transunion reports in its revised 2020 credit forecast.

As many as 8.3 per cent of Albertans could face serious delinquency by the third quarter of 2020, Transunion projects. The credit agency predicts Canadians will have a delinquency rate of 6.9 per cent in the third quarter of this year, the highest since 2015. It estimates the overall national rate will peak in the third quarter, and gradually drop to six per cent by the end of the first quarter of 2021.

Transunion says Canadians were already feeling the crunch before the economic crunch in the fallout of

It’s important to take a step back and reassess how COVID-19 will impact the consumer credit market.

the global pandemic.

“As unemployment reaches levels not seen in several years, it’s important to take a step back and reassess how COVID-19 will impact the consumer credit market in the coming quarters,” Matt Fabian, director of financial services research and consulting at Transunion, said in a Thursday news release.

Fabian says unemployment is impacting consumers’ income and their ability to pay their debts, which is a primary driver of the increased delinquency rates.

“The various government relief benefits, combined with deferral programs provided by lenders, can act to offset some of the COVID -related delinquency,” he said.

“However, each of these measures may contribute to long-term risk at a future time, as consumers will generally still be responsible for paying these deferred obligations at some point in the future.”

The impacts won’t be felt equally across Canada — provinces relying heavily on tourism and travel will be hit harder, Transunion predicts.

Alberta and Newfoundland and Labrador could also see more of a severe impact with the combination of COVID-19 restrictions and lower oil prices.

The credit agency says lenders are preparing for these scenarios in the economic downturn to mitigate risk while supporting consumers who may be suffering because of the crisis.