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Total Canadian debt hit new record in first quarter: TransUnion

Credit cards shown in Halifax on Thursday, Oct. 6, 2022. TransUnion says Canadians' combined outstanding debt hit a new record in the first quarter, reaching $2.32 trillion. THE CANADIAN PRESS/Andrew Vaughan

TORONTO — Canadians' combined outstanding debt hit a new record in the first quarter, reaching $2.32 trillion, TransUnion said Wednesday. 

As the cost of living rose with high inflation and interest rate hikes, many Canadians turned to credit to alleviate financial pressures, the credit reporting agency said in its latest industry insights report.

The number of Canadians with access to credit grew 2.9 per cent year over year, led by subprime consumers, which grew by 8.3 per cent, TransUnion said. 

However, the agency said consumers considered prime or higher still make up almost three-quarters of total consumers with a balance, characterizing that as a "relatively healthy risk distribution." 

Credit card originations were up 20 per cent amid heavy competition in the market, while the average line of credit monthly payment increased by 43 per cent to $436. 

Mortgage origination dropped 32 per cent year over year as higher interest rates slowed demand for new mortgages, especially in the refinance market.

Meanwhile, serious consumer delinquency increased, though TransUnion noted that overall delinquency levels remain below pre-pandemic levels.  

“The financial position of Canadian credit consumers improved coming out of the pandemic, bolstered by higher savings accumulated through the pandemic and supported by a strong labour market," said TransUnion director of research and industry insights Matthew Fabian in the report. 

"However, the longer the current conditions of elevated inflation and higher interest rates persist, the more likely it is that a segment of more vulnerable consumers may increasingly feel the pinch," he said.

"As available disposable incomes become more stretched, we expect a segment of consumers will be more likely to miss payments, and as a result, that delinquency rates will rise."

Average consumer balances on most credit products rose, with the average credit card balance up 11.4 per cent to $3,909, and the average mortgage balance up 7.1 per cent to $349,178. 

TransUnion expects credit trends for 2023 to be mixed due to the uneven impact of higher inflation and interest rates. 

This report by The Canadian Press was first published May 31, 2023.

The Canadian Press

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