It shows that 1.4 million Canadians missed their credits in the second quarter. Although this is a slight decline from the first quarter compared to the same time last year.
Rebecca Oakes, senior vice president of Analytics at Equifax in Canada, said it was “good news” to see an escalating crime rate. “We’re finally starting to see a little bit of stability,” she said in an interview.
“The good news, though, is that below this high level of people, we are still seeing a widening financial gap for some consumers,” she added.
The gap between homeowners and non-family owners widens
The report said one of the 19 Canadians without a mortgage had at least one credit payment, while one of the 37 homeowners had a credit limit.
Total consumer debt rose 3.1% year-on-year to $2.58 trillion, while the average non-debt debt per consumer rose to $22,147, Equifax said.
Oaks said various factors, including high unemployment rates and economic uncertainty, which have expanded due to trade disruptions, have made it difficult for many Canadians to keep up with their daily spending.
The report believes that consumers under 36 are suffering the hardest hit.
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Affordability crisis affects youngest Canadians
Millennials and Gen Z average non-debt debt increased by 2% from the same period last year to $14,304. The group’s more than 90-day non-mortgage balance crime rate also rose to 2.35%, a year-on-year increase of 19.7%.
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“The affordability crisis seems the most difficult,” Oaks said. “Whether there are rising costs, employment uncertainty and limited access to affordable credit, many people are just struggling to make ends meet.”
Additionally, many homeowners with lower mortgage rates during the pandemic may see their payments rise after renewal.
“When many consumers renew their mortgages, payment levels are rising, and when they are a little too many, what you tend to see is (missed payments) in terms of credit cards and so on,” she said.
Ontario remained a hot spot for financial troubles in the second quarter. The report said the crime rate for more than 90 days was 1.75%, 15.2 basis points higher than the national average.
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Toronto and surrounding areas miss higher payment rates
The city of Toronto and its surrounding areas have even higher omission rates, which are exposed to the tariffs on the automotive and steel sectors.
However, Oaks said the financial gap between homeowners and non-family owners in Ontario peaked last year and began to decline.
Another credit-oriented credit agency, Transunion, released its second-quarter consumer credit report last week. It said consumer debt reached $2.52 trillion in the second quarter, up 4.4% year-on-year.
“Sub-consumers are more likely to feel the impact of higher cost of living and may choose to assume additional debt, such as credit card balances, to help cover the costs of goods and services,” Matthew Fabian, director of research and consulting for financial services in Canada, said in a statement.
