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Canadian Consumer Debt To Hit All-Time High By 2014’s End, TransUnion Predicts

Canadian Consumer Debt To Hit All-Time High By 2014’s End, TransUnion Predicts.

CP  |  By LuAnn LaSalle, The Canadian PressPosted: 02/26/2014 8:29 am EST  |  Updated: 02/26/2014 10:59 am EST

MONTREAL – Canadians are still on target for a record year of personal debt despite ending 2013 by making a small dent in the money they owe, says credit monitoring agency TransUnion.

At the end of last year, Canadians owed a total of $27,368 on such things as lines of credit, credit cards and car loans, TransUnion said in a study released Wednesday.

That’s down $117, or 0.42 per cent, from $27,485 in the fourth quarter of 2012 — the highest level of non-mortgage debt on record.

“We’ve been told over and over and over again from so many places that we’ve got to get this debt down and we can’t make it happen,” said Thomas Higgins, TransUnion’s vice-president of analytics and decision services.

TransUnion is sticking by its prediction that average consumer’s total non-mortgage debt will hit an all-time high of $28,853 by the end of 2014.

“There’s nothing to give us any indication that the debt levels are going to start to come down in any noticeable chunk,” Higgins said from Toronto. “Right now, we’re still trending in that direction (to higher debt), for sure.”

Higgins said Canadians started to pile on debt in the years before the 2008 recession. He said he’d have to see Canadians’ personal debt being reduced consistently by $500 to $1,000 over four to six quarters before he would say “we’re sorting of heading somewhere.”

In the last quarter of 2013, consumers’ credit card debt and debt on lines of credit were down a bit, Higgins said.

But consumers spent a little less on holiday shopping only because they got “better deals” rather than consciously cutting spending, he said.

The study also found that loan delinquencies in the quarter ended Dec. 31 were down, meaning that consumers were making minimum payments on their debts.

“We may not be paying all of it, but we’re paying enough down so that you’re still in good standing.”

But Higgins cautioned that if anything impacts the economy, the markets or interest rates, delinquency rates are usually impacted first.

Meanwhile, the study also found that Vancouver residents experienced the biggest increase in consumer debt, hitting $41,077 at the end of last year, up seven per cent from $38,357 in 2012.

On the other hand, those in Montreal managed to reduce their debt by 5.5 per cent from $19,651 to an average of $18,563, the lowest among residents of all major Canadian cities.

Higgins said Vancouver generally has higher incomes allowing consumers to take on more debt, while consumers in Montreal usually save to buy bigger items or pay with debit cards.

In a report on Tuesday, Statistics Canada said Canadian families have become wealthier over the past several years, with net worth rising despite the well-documented growth in household debt and a setback from the recession.

However, there were big differences across age groups, regions and family types and economists noted that the biggest single reason overall for the improvement was rising house prices, which are widely expected to moderate or even fall in the next few years.

Canada Consumer Debt In 2014 Swells To $1.4 Trillion, But Canadians Can Afford It: Equifax

Canada Consumer Debt In 2014 Swells To $1.4 Trillion, But Canadians Can Afford It: Equifax.

CP  |  By Linda Nguyen, The Canadian Press
Posted: 02/10/2014 4:00 am EST  |  Updated: 02/10/2014 6:59 am EST

canada consumer debt

TORONTO – The love affair Canadians have with debt is still going strong, according to a new report by credit monitoring agency Equifax Canada.

Equifax said Monday that its figures show that consumer debt, excluding mortgages, rose to $518.3 billion through the end of November 2013. That was up 4.2 per cent from $497.4 billion a year earlier.

Despite the increase in debt, however, the overall delinquency rate — bills due past 90 days — declined to a record low of 1.12 per cent from 1.19 per cent in the same period of 2012.

“The real pattern that we’ve been observing is that Canadians are taking on more debt, but they can handle it well and are making those monthly payments,” said Regina Malina, director of analytics for Equifax.

Meanwhile, overall consumer debt, including mortgages, also continues to rise — up 9.1 per cent to $1.422 trillion from $1.303 trillion a year earlier.

Malina says the data shows that Canadians are willing to take on more debt — from car loans to credit card purchases — but are more aware of how important it is to keep their debt levels under control.

High debt levels are not a big concern in current conditions, which signal a stabilizing economy, improvement in the unemployment rate and an anticipated gradual increase in interest rates.

But Malina says if any or all of these conditions change, Canadians should reconsider how much debt they are piling on.

“That is the reason why we should remain vigilant,” she said. “It’s easy to get complacent. Even if the debt is up, and the delinquency is going down, it is no cause for alarm but as I said, we have to watch out for these other economic factors.”

Equifax uses data from 25 million files on consumer credit history, including national credit cards, loans and mortgages in compiling the report each quarter.

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