TransUnion: Non-mortgage credit defaults in Canada soar to 2015 levels
Canadian lenders have granted credit deferrals by the hundreds of thousands. In a way, this is not quite enough to deter delinquency. TransUnion data shows a significant increase in defaults for non-mortgage credit in the first quarter of 2020. This increase brings the country to the highest level of defaults in half a decade.
Non-mortgage credit defaults in Canada reach their highest level since 2015
The number of non-mortgage credit accounts that are over 90 days past due is growing rapidly. About 5.75% of non-mortgage credit accounts in the first quarter of 2020 were in arrears, up 2.48% from the previous quarter. This represents an increase of 7.21% compared to the same quarter last year. This is the highest number since at least 2015.
Non-mortgage credit defaults in Canada
The percentage of non-mortgage accounts that are over 90 days past due.
Source: TransUnion, Better Living.
Ontario credit defaults hit 5.35%
Ontario households are also lagging behind, reaching the highest level in just a few years. About 5.35% of non-mortgage credit accounts in the first quarter of 2020 became delinquent, up 2.22% from the previous quarter. This represents an increase of 5.56% compared to the same quarter last year. Ontario last experienced this level in the third quarter of 2017, but the rate was heading in the opposite direction.
BC credit defaults hit 5.86%
British Columbia is seeing non-mortgage defaults at their highest level in years. About 5.86% of non-mortgage credit accounts became delinquent in the first quarter of 2020, up 2.53% from the previous quarter. This represents an increase of 5.56% compared to the same quarter last year. Annual growth is above the national average, with the share of overdue accounts reaching the highest level since 2015.
Payment defaults in Quebec reach 4.5% of accounts
Quebec is experiencing below-average growth in defaults on non-mortgage credit accounts. About 4.55% of non-mortgage credit accounts became delinquent in the first quarter of 2020, up 2.28% from the previous quarter. This represents an increase of 5.23% compared to the same month last year. This is the highest rate since… you guessed it, 2015.
The increase in non-mortgage credit defaults is somewhat surprising. Banks have deferred payments and lowered interest rates specifically to prevent this. Even with the hundreds of thousands of deferrals, some people struggle to manage their credit. TransUnion expects this segment to continue to grow, ahead of an increase in mortgage delinquencies. Typically, households will default on non-mortgage credit before mortgage credit.
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