TORONTO, ON (June 16, 2020) – Equifax® Canada’s latest report on Canadian consumer credit provides a view into the early impact of the COVID-19 shutdowns. Average non-mortgage debt dropped 0.5 per cent in the first quarter of 2020 reflecting the significant drop in consumer spending in March. This is the first decline in average balances in more than a decade.

“With stores and restaurants shut down, consumers were able to cut back on their spending in March as retail sales numbers indicated,” said Bill Johnston, Equifax Canada’s Vice President of Data & Analytics. “The result was a plunge in credit card spending that translated into much lower balances. That trend gained momentum in April, with few signs that consumers are looking to debt for support in the early days of the pandemic.”

In total, average debt per person rose to $73,030, an increase of 2.4 per cent compared to the first quarter of 2019. Total outstanding debt was up 4.3 per cent to $1.989 trillion dollars. Despite the pandemic, mortgages continued to gain upward momentum, rising 5.7 per cent compared to 2019. This growth reflects home sales prior to the economic shutdown, as activity slowed considerably by the end of March.

The impact of the pandemic has been most evident in the volume of consumers looking for new credit. Inquiries from lenders dropped significantly in mid-March and early April. This is a good indicator of credit demand. The trend has been improving in recent weeks, led by mortgage and auto financing.

“Our data showed the sudden drop in credit demand as the economy shutdown in late March,” added Johnston. “Those industries more dependent on physical retail locations were the most impacted, but it appears the worst is behind us.”

Pandemic impact on delinquencies and bankruptcies

The 90+ day delinquency rate (the percentage of credit users that have missed 3+ payments) for non-mortgage debt delinquency rate rose to 1.22 per cent (9%). British Columbia (+12.65%), Ontario (12.33%) and Alberta (11.79%) were once again the highest in this category. Overall, the younger borrowers have demonstrated more stable delinquency rates in the early phase of the pandemic, which may partly be reflected in the increased use of payment deferrals.

“The delinquency trend rose again in Q1, but it was not a real reflection of COVID,” added Johnston. “Bankruptcies finally slowed and we know April was also very low as services shut down. Unfortunately, that trend will likely not continue, as we expect delinquencies and bankruptcies to rise in the latter part of the year.”

Debt (excluding mortgages) & Delinquency Rates

Major City Analysis – Debt (excluding mortgages) & Delinquency Rates

Province Analysis - Debt (excluding mortgages) & Delinquency Rates & Bankruptcy Amount

* Based on Equifax data for Q1 2020