Credit cards are displayed in Montreal, Wednesday, Dec. 12, 2012. Equifax says the debt profile of Canadians has changed throughout the pandemic, with mortgages accounting for a larger portion of people’s debt. THE CANADIAN PRESS/Ryan Remiorz

Credit cards are displayed in Montreal, Wednesday, Dec. 12, 2012. Equifax says the debt profile of Canadians has changed throughout the pandemic, with mortgages accounting for a larger portion of people’s debt. THE CANADIAN PRESS/Ryan Remiorz

Consumer debt driven by new mortgages, but credit card debt at six-year low

Potential exists that first-time homebuyers are starting to get priced out of the market

Equifax says the debt profile of Canadians has changed throughout the pandemic, with mortgages accounting for a larger portion of people’s debt.

The company said Tuesday consumer debt stood at $2.08 trillion for the first quarter of 2021, up 0.62 per cent from the fourth quarter of 2020 and up 4.78 per cent from a year earlier.

It said the rise was largely driven by mortgages, with the number of new mortgages up 41.2 per cent from a year ago when the country experienced the start of the pandemic.

However Rebecca Oakes, assistant vice-president of advanced analytics at Equifax, said the rate of new mortgages in the latest quarter dropped when compared with the final quarter of 2020.

“There is a bit of potential that first-time homebuyers are starting to get priced out of the market, particularly in some of those hot markets like British Columbia and Ontario,” she said.

Oakes said the largest increases in consumer debt were in British Columbia and Ontario, a direct result of the high home prices in those provinces.

At the same time, the credit reporting agency said consumer credit card debt was at a six-year low, as reduced spending led to healthier habits around daily spending.

“Across the board in all age groups, we’re starting to see people pay more than they actually spend on a credit card, which is a real positive behaviour change in terms of consumers,” said Oakes, who said consumers paid $11 for ever $10 they spent in January 2021.

“We know that’s heavily impacted by some of the lockdowns and the ability for consumers to spend in the same way they once were.”

Meanwhile, other big-ticket credit items like lines of credit have also accounted for a the general rise in Canadian debt.

Oakes said there was a 60 per cent increase in home equity lines of credit, which are secured against the value of a borrower’s home.

“We are seeing people take on additional levels of home equity lines of credit, and where that starts to become a concern is if interest rates go up,” since those kinds of loans are often at a variable interest rate, Oakes said.

Equifax also noted a rise in car leasing as opposed to car financing, which Oakes said could be related to higher costs for cars that are being seen in the U.S. market.

She said delinquencies were still happening at a much lower rate than pre-pandemic, as consumers continue to benefit from government financial support during the pandemic. But Oakes warned people need to prepare for those supports to subside to ensure their financial health.

—The Canadian Press

RELATED: RBC CEO wants policy-makers to tackle lack of housing supply pushing up prices

DebtFinanceHousing

Just Posted

A million-dollar ticket was sold to an individual in Vernon from the Lotto Max draw Friday, June 11, 2021. (Photo courtesy of BCLC)
Million-dollar lotto ticket sold in Vernon

One lucky individual holds one of 20 tickets worth $1 million from Friday’s Lotto Max draw

Carina Stokes, bar manager at Enderby’s Small Axe Bistro, was recognized as one of four exceptional B.C. restaurant workers by the British Columbia Restaurant and Foodservices Association Tuesday, June 8, 2021. (Contributed)
Enderby bar manager recognized as ‘stand-up’ B.C. restaurant worker

Small Axe Roadhouse’s Carina Stokes one of four to receive special recognition from the BCRFA

Dawn Low is the first female CAO for the City of Revelstoke. (Jocelyn Doll/Revelstoke Review file)
Armstrong welcomes new CAO

Dawn Low previously served as CAO in Revelstoke since 2019

18-year-old skier Logan Leach follows his guide, Julien Petit, down an alpine track. The Lumby athlete who is visually impaired has been named to Alpine Canada’s Ski Team ahead of the 2022 Paralympic Games in Beijing. (Contributed)
Lumby’s Logan Leach named to national ski team

The 18-year-old visually impaired athlete officially joins Canada’s Para-Alpine roster ahead of Beijing 2022

Sovereign Lake Nordic Club is the first ski area in Canada to signify its commitment to ending working poverty, by paying all its staff and contracted workers a living wage. (Contributed)
Vernon ski area first in Canada to pay living wage

Sovereign Lake Nordic Club invests in staff and contracted workers

At an outdoor drive-in convocation ceremony, Mount Royal University bestows an honorary Doctor of Laws on Blackfoot Elder and residential school survivor Clarence Wolfleg in Calgary on Tuesday, June 8, 2021. THE CANADIAN PRESS/Jeff McIntosh
‘You didn’t get the best of me’: Residential school survivor gets honorary doctorate

Clarence Wolfleg receives honorary doctorate from Mount Royal University, the highest honour the school gives out

The RCMP presence in Central Okanagan public schools is being reviewed by the board of education. (File photo)
RCMP presence welcomed in Central Okanagan public schools

Staff survey feedback overwhelmingly positive from students, staff and parents

“They will never be forgotten, every child matters,” says Sioux Valley Chief Jennifer Bone in a video statement June 1. (Screen grab)
104 ‘potential graves’ detected at site of former residential school in Manitoba

Sioux Valley Dakota Nation working to identify, repatriate students buried near former Brandon residential school

The Queen Victoria statue at the B.C. legislature was splattered with what looks like red paint on Friday. (Nicole Crescenzi/News Staff)
Queen Victoria statue at B.C. legislature vandalized Friday

Statue splattered with red paint by old growth forest proponents

Police cars are seen parked outside Vancouver Police Department headquarters on Saturday, January 9, 2021. THE CANADIAN PRESS/Darryl Dyck
Vancouver police officer charged with assault during an arrest in 2019

The service has released no other details about the allegations

Denmark’s Christian Eriksen receives medical attention after collapsing during the Euro 2020 soccer championship group B match between Denmark and Finland at Parken stadium in Copenhagen, Saturday, June 12, 2021. (AP Photo/Martin Meissner, Pool)
Christian Eriksen in stable condition, Euro 2020 match resumes

Eriksen was given chest compressions after collapsing on the field during a European Championship

Members of the Department of Fisheries and Oceans’ Marine Mammal Response Program rescued an adult humpback what that was entangled in commercial fishing gear in the waters off of Entrance Island on Thursday, June 10. (Photo courtesy Marine Mammal Response Program)
Rescuers free humpback ‘anchored’ down by prawn traps off Vancouver Island

Department of Fisheries and Oceans responders spend hours untangling whale

Most Read