Canadian debt levels are rising as mortgages weigh on households.
A new report from Equifax Canada has found that consumer debt rose in the second quarter of this year amid a slower payoff of existing mortgages. Total consumer debt in Canada climbed to $1.99 trillion in the second quarter, up 2.8% compared to the same quarter of 2019.
Mortgage balances weighed on Canadians’ credit the most with increased refinancing activity and higher average home prices pushing the average debt per person to $73,532, which is 2.2% higher compared to the second quarter of last year.
Non-mortgage debt dropped compared to 2019 as economic shutdowns across the country impacted Canadians’ credit card usage. However, Equifax noted in its report that credit card spending started to rise in June and that "Credit card spending was effectively back to pre-COVID levels by the end of the quarter."
Many Canadians have resorted to credit and mortgage payment deferrals to help ease the financial stress of the COVID-19 pandemic. This has been most popular among Canadians aged 35-44, according to Equifax, where 15.1% have used some kind of deferral compared to 5.7% of seniors.
"One in five people utilizing deferred payments were already financially stressed prior to the start of the pandemic. Some of these consumers may find it harder to recover as support mechanisms start to reduce," said Equifax in its latest report.
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