According to financial analytics firm Equifax Canada, total consumer debt in Canada rose to $2.32 trillion in the second quarter of 2022, an 8.2% increase from the same quarter last year.
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In particular, the increase in new loans and higher inflation-related spending caused non-mortgage debt to soar by 5.2% year-on-year. In Quebec, the average debt is now $18,429, the second lowest in Canada behind Manitoba ($16,956) and ahead of Nova Scotia ($20,701).
“Financial hardship is becoming a reality for more and more Canadians. The consequences of these consumer lending difficulties are affecting spending on credit cards and other types of nonmortgage debt, such as auto loans and lines of credit, whose balances are growing,” said Rebecca Oakes, vice president of Advanced Analytics Equifax Canada.
All-time highs for credit cards
This quarter, credit card balances hit the highest level since the fourth quarter of 2019, just before the pandemic, and is up 6.4% since the last quarter. As a result, credit card balances have reached “historic highs,” according to Ms. Oakes.
In her opinion, this strong demand for credit cards is creating a competitive market for lenders. On average, the new credit limit offered is over $5,800 for new cards, which is the highest limit in seven years. Monthly expenses are up 22% year over year.
Not surprisingly, the real estate market is developing at a snail’s pace
According to the Equifax report, new mortgage applications fell 16.4% in the second quarter of 2022. High home prices have also impacted affordability for all buyers, particularly those of a primary home, we read. The size of new mortgages remains relatively high at $430,700 for first-time homebuyers and $367,500 for others.
“Higher interest rates combined with high inflation are really helping to increase monthly consumer spending; Many may have difficulty qualifying for a mortgage,” Oakes warned.