The average mortgage balance has increased across Canada over the past year, but mortgage delinquency rates have actually fallen, according to TransUnion.
The average balance in Canada inched up almost 4.8% in the past year to $198,781 as of the end of June. Over the same period, the serious delinquency rate – defined as anything over 60 days for mortgages – fell four basis points to 0.56%. This was the fourth consecutive quarterly drop.
“Home values continue to rise compared with the previous year, pushing overall mortgage debt levels up,” said TransUnion Canada director of research and analysis Matt Fabian. “Despite increases in mortgage debt, serious delinquency rates remain low with very little volatility observed over the past two years.
“Consumers have so far been able to manage their mortgage obligations despite the increasing balance levels.”
Fabian went on to say TransUnion doesn’t expect the trend of decreasing delinquencies to change much even as interest rates rise.
The average non-mortgage debt across Canada increased 2.7% year-over-year to $22,154. This growth relates to most credit products, but not credit cards. Demand for credit cards is “weak,” according to TransUnion, and fewer Canadians have them than they did last year. Credit card acquisitions are also falling, which Fabian said could be because of market saturation. But those who do have cards have bigger balances; the average balance across Canada was $2,840 at the end of Q2, which is an annual increase of 3.11%.
Fabian said this jump shows that those who do have credit cards are continuing to use them.
“We have also seen lenders continue to increase limits to existing customers, which is helping consumers meet their demand for higher borrowing levels,” Fabian said.
“In light of continued controlled levels of card delinquency, this strategy of increasing card credit limits appears to be effective.”
Despite the growth in other credit types, the serious delinquency rate for all non-mortgage debt fell eight basis points to 2.65%. This rate considers anything over 90 days past due for credit cards and 60 days for other credit products.
@EmmaHampelBIV
