Credit card spending rises as inflation soars


Equifax Canada Quarterly Market Pulse Credit Trends Report

TORONTO, June 2, 2022 (GLOBE NEWSWIRE) — Consumer confidence in credit cards is on the rise, with the average monthly credit card consumer spending up 17.5% in the first quarter of 2022 compared to with the lows of the first quarter of 2021, according to the most recent report from Equifax Canada. Market Pulse consumer credit trends and outlook report. Ontario saw the largest increase in credit card spending (20.4%) followed by Quebec (18.4%) compared to the same period last year.

Pent-up demand and increased travel with the easing of COVID restrictions, combined with skyrocketing inflation, have led to some of the highest increases in credit card spending we have ever seen. Unfortunately for consumers, this is also a time when the Bank of Canada is raising interest rates,” said Rebecca Oakes, vice president of advanced research at Equifax Canada. “Across all age groups, Gen Z and Millennials are the largest consumer spenders. With gas and food prices rising faster than general inflation, it’s very important for consumers to review their budget allocations.”

New card volume increased 31.2% compared to the first quarter of 2021 and 5.1% compared to the first quarter of 2020. Lenders are providing higher credit limits to consumers on credit cards new cards, and the average credit limit on new cards this quarter topped $5,500, the highest in seven years.

Overall credit card balances increased 9.5% this quarter compared to the first quarter of 2021 and 2.4% compared to last quarter. This has been the largest year-over-year increase in credit card balances since the start of the pandemic, but these balances have yet to reach pre-pandemic levels.

Total consumer debt continues to grow
Total consumer debt increased 8.6% in the first quarter of 2022, rising to $2.3 trillion in the last 12 months. In individual terms, average consumer debt (not including mortgages) is now $20,744, an increase of 1.5% compared to the first quarter of 2021. It is the first year-over-year increase since 2019.

Both new car financing and a comparable bank loan* volumes were down 1.1% and 6.4% year over year, respectively. However, high car prices continue to push up the average new car loan size ($26k) and comparable bank loans ($31k) by 5.9 percent and 10.2 percent.

The housing market shows a sharp drop from the peaks of 2021
Multiple interest rate hikes, coupled with seasonality, have reduced new mortgage volume by 13.2% this quarter compared to peaks in Q1 2021, but levels remain higher than previous figures to the pandemic. New HELOCs also showed a seasonal drop, but remained 6.6% higher compared to the first quarter of 2021. Some of the biggest declines were seen in the most dynamic real estate markets, Ontario and BC, with 15, 7% and 17.6% year over year. falls in the volume of new mortgages.

“First-time home buyers are feeling the heat of rising interest rates,” Oakes said. “Even though house prices have stabilized somewhat, the Bank of Canada’s interest rate increases are reducing consumer affordability. First-time homebuyers are not only taking out higher loan amounts, but with higher interest rates they are also paying more in monthly payments, unlike first-time homebuyers in early 2021 who are They benefited from lower rates and payments.

First-time homebuyer volume fell 16.1% in the first quarter of 2022 compared to the first quarter of 2021. While first-time homebuyers struggle with affordability, the share of consumers with multiple mortgages continues to rise. Nationwide, 17% of consumers have more than one active mortgage in the first quarter of 2022, up 2.5% from the first quarter of 2021 and 9.3% compared to the period of interest rates. high interest rates in the first quarter of 2018.

Small increases in non-mortgage delinquency rates
The 90+ day non-mortgage delinquency rate rose to 0.88%, up 2.1% from last quarter but still 15.7% lower than in the first quarter of 2021. Early signs Stress stress are more visible among younger consumers, with non-mortgage delinquency rates 20.9% and 5.1% higher than last quarter for the under-25 and 25-34 age groups, respectively. Credit cards, auto loans and bank loans are the first products where delinquencies have started to show quarter-over-quarter increases.

“While overall delinquency rates are still well below pre-pandemic levels, we anticipate a steady increase in delinquencies through the end of the year,” Oakes said. “The good news is that we are still below pre-pandemic levels when it comes to late payments from consumers. However, increased spending on credit cards and potential reliance on credit for essential items of daily living may lead to increased stress in the coming months.”

Analysis of age groups – Debt and Delinquency Rates (excluding mortgages)

Average
Debt
(Q1 2022)
Average change in debt
Year after year
(Q1 2022 vs. Q1 2021)
Delinquency
Speed

(Q1 2022)
Delinquency Rate Change
Year after year
(Q1 2022 vs. Q1 2021)
18-25 $8,129 -4.09% 1.37% -3.71%
26-35 $16,832 2.83% 1.27% -14.53%
36-45 $25,084 3.57% 0.97% -18.09%
46-55 $31,442 2.82% 0.72% -19.48%
56-65 $26,165 1.12% 0.66% -17.01%
65+ $14,386 0.35% 0.79% -12.35%
Canada $20,744 1.54% 0.88% -15.66%

Analysis of the main city – Debt and Delinquency Rates (excluding mortgages)

City average debt
(Q1 2022)
Average change in debt
Year after year
(Q1 2022 vs. Q1 2021)
Delinquency
Speed

(Q1 2022)
Delinquency Rate Change
Year after year
(Q1 2022 vs. Q1 2021)
Calgary $24,987 -1.22% 1.13% -13.30%
Edmonton $24,259 -1.13% 1.36% -11.68%
halifax $20,822 -1.68% 0.96% -20.61%
Montreal $15,999 5.01% 0.76% -18.57%
Ottawa $18,454 2.70% 0.78% -18.82%
Toronto $19,904 4.65% 1.06% -15.71%
Vancouver $22,449 3.64% 0.64% -18.76%
de San Juan $23,553 -0.63% 1.10% -20.86%
Fort McMurray $37,320 -1.16% 1.55% -9.51%

Province Analysis -Debt and Delinquency Rates (excluding mortgages)

Province average debt
(Q1 2022)
Average change in debt
Year after year
(Q1 2022 vs. Q1 2021)
Delinquency
Speed

(Q1 2022)
Delinquency Rate Change
Year after year
(Q1 2022 vs. Q1 2021)
Ontario $20,878 2.87% 0.83% -17.20%
quebec $17,989 2.40% 0.60% -15.10%
New Scotland $20,568 -2.02% 1.14% -16.12%
New Brunswick $21,728 -2.55% 1.25% -15.61%
PEI $21,916 0.41% 0.78% -24.49%
Newfoundland $22,792 -0.55% 1.16% -18.97%
eastern region $21,492 -1.72% 1.16% -17.05%
alberta $25,051 -1.39% 1.27% -13.22%
manitoba $16,670 -1.34% 1.13% -4.23%
Saskatchewan $22,269 -1.80% 1.21% -11.24%
British Columbia $21,616 2.35% 0.76% -15.83%
Western region $22,392 0.16% 1.03% -13.61%
Canada $20,744 1.54% 0.88% -15.66%

*Comparable bank loans are installment loans with limits between $5,000 and $100,000
** Based on Equifax data for the first quarter of 2022

About Equifax
At Equifax (NYSE: EFX), we believe that knowledge drives progress. As a global data, analytics and technology company, we play an essential role in the global economy by helping financial institutions, businesses, employers and government agencies make critical decisions with greater confidence. Our unique blend of differentiated data, analytics, and cloud technology drives insights to drive decisions to move people forward. Headquartered in Atlanta and supported by more than 13,000 employees worldwide, Equifax operates or has investments in 24 countries in North America, Central and South America, Europe and the Asia Pacific region. For more information visit Equifax.ca.

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