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Increase of 7.3% over one year in debt in Canada



An increase in the number of borrowers helped to increase the total debt of Canadian consumers by 7.3% in one year in the third quarter, according to a compilation released by Equifax Canada.

The credit reporting agency reports that average non-mortgage debt reached $21,183, the highest level since the second quarter of 2020. This overall debt amounted to 599.9 billion, up 5 .3% compared to last year and 1.9% compared to the third quarter of 2019, as the number of borrowers increased by 3.1%.

Rebecca Oakes, head of advanced analytics at Equifax Canada, says rising debt stems from a combination of growing immigration, pent-up spending and increased borrowing as consumers feel the pain. pressure from the rising cost of living.

Credit card spending in the quarter increased 17.3% from a year ago to a record high for the period. Average credit card spend jumped 21.8% from the third quarter of 2019.

Rebecca Oakes has seen signs that borrowers are starting to struggle to pay bills, with average payment rates for those with balances lower than a year ago.

Delinquent auto loan accounts have also started to rise, especially those opened since late 2021.

On the other hand, new mortgage volume fell 22.7% in the quarter from a year ago and 14.9% from the third quarter of 2019. First-time home buyers are paying more than $500 more for almost the same loan amounts as first-time homebuyers last year.

Overall Canadian insolvency rates are up from a year ago.

Rebecca Oakes predicts that the true impact of interest rate hikes could be visible by the end of 2023.

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