Consumer debt nears $2T as mortgage costs jump: report
Canadian consumer debt closed in on the $2-trillion mark at the end of last year as higher mortgage costs hit home, says credit report company Equifax Canada Inc.
Total consumer debt expanded by 4.4 per cent in the fourth quarter of 2019 from a year earlier to $1.989 trillion as mortgage debt rose 5.2 per cent to $1.341 trillion, Equifax said in its report, released Thursday. Non-mortgage debt, including credit cards, loans and lines of credit, rose a corresponding 2.7 per cent, it said.
Average mortgages surged 7.2 per cent year over year during the quarter to $289,000. New mortgages averaged $448,000 in Toronto, an 8.5-per-cent jump — the highest on record, Equifax said. In Vancouver, the increase was 7.4 per cent to $455,000, regaining ground it had dropped over the past two years as government initiatives to limit speculation bit into the market.
“Consumers had figured out the mortgage stress test and were back in the housing market,” said Bill Johnston, vice-president of data and analytics at Equifax. “Auto loans and lines moderated with delinquency rates marching higher for much of the year. These trends are likely to continue for much of 2020.”
Lower use of credit lines, comprising 45 per cent of non-mortgage debt, represented the most significant drag on non-mortgage debt growth, falling 2.3 per cent in Q4 compared to a year earlier, Johnston said by phone in Toronto.
Average non-mortgage debt grew at its slowest pace since 2013, up one per cent during the year compared to 2018, Johnston said. However, the non-mortgage debt delinquency rate rose to 1.19 per cent, its highest since 2012.
The cumulative effect of Bank of Canada’s benchmark interest rate increases from 0.5 per cent in 2017 to 1.75 per cent in October 2018 were responsible for the pullback as consumers struggled to cope with higher costs.
“Credit card debt grew by 2.25 per cent in the quarter but that was down from four per cent in the first quarter,” Johnston said.