Rising Consumer Debt Impacts Canadians
TORONTO – Economic pressures continue to mount across Canada, with consumer debt levels climbing to $2.5 trillion in the second quarter of 2024. According to Equifax® Canada’s latest Market Pulse Consumer Credit Trends and Insights Report, this marks a 4.2% increase compared to the same period in 2023. Credit cards have been the primary driver, with outstanding balances soaring to $122 billion, a 13.7% jump from last year. The average credit card balance per consumer now stands at over $4,300, the highest since 2007. This surge in debt is largely due to a reduction in card payment rates, particularly among consumers under 35, who have seen the steepest declines.
Impact on Younger Canadians
As the cost of living rises and unemployment reaches 6.4%, younger Canadians are facing increased financial stress. The report shows that one in 23 consumers missed a payment on at least one credit product in Q2 2024, up from one in 25 the previous year. Delinquency rates are highest among those aged 26-35, with auto loans and lines of credit being particularly affected. These economic challenges are also contributing to a significant rise in multigenerational living. Nearly one in three Canadian households now includes adult children living with their parents, a trend that is even more pronounced in Ontario, where 32.8% of households are multigenerational.
Housing Market Strain
The housing market is also feeling the strain, particularly for first-time homebuyers and those renewing their mortgages. High interest rates and home prices are creating significant barriers, leading to a decline in the proportion of first-time buyers. The average first-time homebuyer loan now exceeds $410,000, with many opting for longer amortization terms. Renewing homeowners are also struggling, with 15% facing monthly payment increases of over $300 in 2024, double the percentage from 2019. In Ontario and British Columbia, this figure rises to around 20%, forcing many to extend their mortgage terms to manage the higher costs.
