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

The ‘official’ opening of 2nd Edition Coworking in downtown Fernie, a project five years in the making by the Fernie Chamber of Commerce. Left to right: Executive Director of the Fernie Chamber Brad Parsell, incoming President of the Fernie Chamber Norm Fraser, outgoing President of the Fernie Chamber Anita Palmer, and Mayor of Fernie Ange Qualizza. (Scott Tibballs / The Free Press)
Fernie Chamber cuts the ribbon on 2nd Edition

The new coworking space in Fernie is now ‘officially’ open, but has been operating since early 2021

Residents line up outside the Vernon Recreation Complex for their COVID-19 vaccine Saturday, June 5. (Jennifer Smith - Morning Star)
No appointments necessary for first dose COVID-19 vaccine: Interior Health

People can just show up at clinics, register on the spot and get the shot

Sparwood Mayor David Wilks with the new AED SaveStation installed at the Sparwood Leisure Centre. (Contributed by District of Sparwood)
Sparwood installs public AED

The SaveStation was installed thanks to a grant from CP Rail

Provincial Health Officer Dr. Bonnie Henry on Thursday, June 10, mentioned Grand Forks among two other COVID “hot spots” in B.C. Photo: Screenshot - YouTube COVID-19 BC Update, June 10, 2021
PHO Henry says West Kootenay city is a COVID ‘hot spot’ in B.C.

There are 11 cases of COVID-19 in the Grand Forks local health area, according the BC CDC

(File)
“Gift card scam,” and “grandparent scam” are on the rise, Cranbrook RCMP say

Folks are falling for these scams: “No Government agency or reputable company will ever ask anyone to pay with gift cards in lieu of their fines”

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 Great Ogopogo Bathtub Race has been held in Summerland as a fundraising event. Do you know which Canadian city introduced this sport? (Black Press file photo)
QUIZ: A summer’s day at the water

How much do you know about boats, lakes and water?

Two-year-old Ivy McLeod laughs while playing with Lucky the puppy outside their Chilliwack home on Thursday, June 10, 2021. (Jenna Hauck/ Chilliwack Progress)
VIDEO: B.C. family finds ‘perfect’ puppy with limb difference for 2-year-old Ivy

Ivy has special bond with Lucky the puppy who was also born with limb difference

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

A million-dollar ticket was sold to an individual in Vernon from the Lotto Max draw Friday, June 11, 2021. (Photo courtesy of BCLC)
Lottery ticket worth $1 million sold in Vernon

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

“65 years, I’ve carried the stories in my mind and live it every day,” says Jack Kruger. (Athena Bonneau)
‘Maybe this time they will listen’: Survivor shares stories from B.C. residential school

Jack Kruger, living in Syilx territory, wasn’t surprised by news of 215 children’s remains found on the grounds of the former Kamloops Indian Residential School

A logging truck carries its load down the Elaho Valley near in Squamish, B.C. in this file photo. THE CANADIAN PRESS/Chuck Stoody
Squamish Nation calls for old-growth logging moratorium in its territory

The nation says 44% of old-growth forests in its 6,900-square kilometre territory are protected while the rest remain at risk

Flowers and cards are left at a makeshift memorial at a monument outside the former Kamloops Indian Residential School to honour the 215 children whose remains are believed to have been discovered buried near the city in Kamloops, B.C., on Monday, May 31, 2021. THE CANADIAN PRESS/Darryl Dyck
‘Pick a Sunday:’ Indigenous leaders ask Catholics to stay home, push for apology

Indigenous leaders are calling on Catholics to stand in solidarity with residential school survivors by not attending church services

Most Read