Average consumer debt load hits new high above $27K
Canadian consumer debt loads increased by 6% in 2012, fastest pace since 2009
CBC News
Posted: Feb 5, 2013 6:04 AM ET
Last Updated: Feb 5, 2013 10:02 PM ET
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The average Canadian's consumer debt load hit $27,485 at the end of 2012, a six per cent increase over the previous year's level and the first time the figure has been above $27,000.
Credit monitoring firm TransUnion says the average Canadian's consumer debt load increased at the fastest pace seen since 2009 at the end of last year.
"Increases in personal debt are not surprising during the final quarter of the year, as consumers tend to spend more during the holiday season," TransUnion's vice-president of analytics Thomas Higgins said.
"The rise on a year-over-year basis should be more concerning, as Canadians’ debt loads increased by more than $1,500."
Debt loads increase
Debt loads ticked higher in every province except B.C., where they shrank by 0.09 per cent. TransUnion notes, however, that while consumer debt loads in B.C. are shrinking, at $37,244 the province still has the highest average debt load in the country.
In terms of consumer debt, the largest increases were found in Alberta (at 11.2 per cent), Quebec (9.39 per cent) and Prince Edward Island (9.04 per cent.)
Within the data, all forms of consumer debt were up, but two especially: auto loans and installment loan borrower debt — the industry's term to describe loans that would be taken out to buy things like home furnishings and other big-ticket consumer items.
The former increased by 8.93 per cent in the 12 months up until the end of 2012. That's actually a decline from some double-digit annual increases seen in recent quarters, but still the segment with the highest growth rate.
"That's a trend we're seeing as people held off buying new cars during the recession, but now they're starting to replace them and that's taking financing," said Andy Fisher, a partner at bankruptcy and insolvency firm A. Farber & Partners.
"With debt loads increasing, any sort of hiccup can be enough to put you over the edge in a situation like that, but people aren't seeking help early enough to give them options," Fisher says.
Installment loan debt was up by 6.71 per cent, year over year, its fastest pace of growth in two years, TransUnion's report said.
After two years of decline, debt on lines of credit increased by 2.64 per cent during the last three months of 2012, the report found.
Delinquencies down
And credit card debt also ticked higher for the first time in two years, although only by 0.12 per cent.
There was some encouraging news on the delinquency front, however. That's the measure that tracks the percentage of people who are unable to stay on top of their debts and have not paid them in at least three months.
Installment loans have the highest delinquency rate of any consumer debt, but even it is only 1.18 per cent, down by more than three per cent from the same level a year earlier. None of the other forms of consumer debt (either credit cards, lines of credit or auto loans) had a delinquency rate anywhere higher than 0.3 per cent.
"While Canadian debt levels continue their upward track, delinquency levels remain low, and in some cases, are drifting even lower," Higgins said. "It's an especially positive sign to see lines of credit, which make up the majority of personal debt when excluding mortgages, experience yearly declines in delinquencies."
Fisher suggests that the federal government's move to tighten mortgage lending rules is also having an impact. He says the crackdown on home equity lines of credit has moved financial stresses to other areas, as people aren't able to lean on the equity in their homes to pay the bills.
"People were using their homes like ATMs and it's not as easy to do that anymore," Fisher says.
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