‘No trouble’ for seniors paying off added debt

NEW REPORT

GARRY MARR TORONTO • No age segment is ramping up debt faster than the senior population, according to a new survey published Tuesday.

Atlanta-based debt rating agency Equifax Inc. found the average debt, not including mortgages, of Canadians 65 and over was $15,651 in the second quarter of 2017, still low compared to the Canadian average of $22,595. But senior debt grew by 4.3 per cent over the past year, outpacing every other segment of the population over 18.

“They’re adding debt, which would normally be a concern. However, they’re having no trouble with payments,” said Regina Malina, senior director of data and analytics at Equifax Canada. “Seniors continue to surprise us by how they are managing their debt.”

The delinquency rate among seniors was 0.88 per cent in the second quarter, down 7.3 per cent from a year ago. The Canadian delinquency rate overall was 1.09 per cent in the second quarter, down 4.2 per cent from a year ago. Delinquency rates are going down in every province but Alberta, where they climbed 1.7 per cent from a year ago.

Laurie Campbell, executive of Credit Canada which deals with consumers in credit crisis, said she does see an increase in seniors showing up in her offices.

“Sometimes it’s because they got terminated from their job sooner than they wished and getting back into the labour market is difficult when you’re older,” said Campbell. “Some seniors leave their job and think they can manage financially and then they can’t. (At that point) they can’t get a job. There’s also the boomerang effect of adult children coming back home and living with their senior parents.”

The overall debt picture continues to show Canadians are increasing what they owe, even if they are making their payments on time. The average debt across the country was up 3.3 per cent in the second quarter. Total debt including mortgages climbed to $1.769 trillion nationally, up from $1.666 trillion a year ago, an increase of 6.2 per cent.

Of the debt, mortgages made up 67.2 per cent, while bank revolving lines of credit made up 14.6 per cent, instalment loans 9.2 per cent, credit cards 5.1 per cent and auto finance 3.9 per cent.

Pressure is growing on the Bank of Canada to increase rates again after raising its overnight lending rate 25 basis points in July. That move bumped up the prime lending rate from 2.7 per cent to 2.95 at most banks. Another central bank increase could make it tougher to borrow for consumers.

“Their overall ability to pay back this money on time remains stable though. As interest rates gradually rise, and borrowing costs increase, this trend may be impacted over time,” said Malina.