TORONTO, ON (March 7, 2022) – New mortgage growth declined by 8.1 per cent in Q4 2021 when compared to Q4 2020 according to Equifax Canada’s most recent Market Pulse consumer credit trends and insights report. The biggest drop in new mortgages was seen in some of the hottest housing markets like Toronto and Hamilton with a 16.1 per cent and 18.7 per cent drop respectively when compared to Q4 2020.

“There’s no question that sky-rocketing house prices have decreased housing affordability across all segments,” said Rebecca Oakes, AVP of Advanced Analytics at Equifax Canada. “In addition to high house prices, lenders have also started to move interest rates up in anticipation of rate rises from the Bank of Canada. This could also be limiting the purchasing capacity of many consumers.” 

The average loan amount for new mortgages shows a 10.1 per cent increase in Q4 2021 when compared to Q4 2020 but it has dropped by 1.5 per cent when compared to the previous quarter Q3 2021. This is the first time that the average loan amount for new mortgages has shown a quarter-over-quarter drop since the pandemic began. Oakes noted this may be a sign of average home prices stabilizing. However, continued demand and lack of supply could lead to further rises in the property prices. The average loan amount for new mortgages is at $355K as of Q4 2021.

CREDIT CARD SPENDING HIGHER THAN EVER

Total consumer credit card spending was up by 14.4 per cent when compared to Q4 2020 and 9.8 per cent from the last quarter. The average monthly credit spend per credit card consumer is now $2,205, up by 15.2 per cent this quarter when compared Q4 2020 and up by 6.8 per cent when compared to the pre-pandemic period Q4 2019. 

“The holiday period always leads to an increase in spending, but Q4 2021 saw higher than ever average credit card spending per credit card consumer,” said Oakes. “Consumer payment behaviour is slowly getting back to pre-pandemic levels as disposable income from government benefits depletes, but consumers are making less payment for every dollar spent compared to the same time period last year.

Consumers are paying $0.96 for every dollar spent, which is down by 2.9% when compared to Q4 2020. Higher spend is also reflected in overall credit card balance which was up by 2.4 per cent when compared to Q4 2020. Credit card demand is increasing again with new card growth finally reaching pre-pandemic levels. The average credit limit on new cards has risen by 23.2 per cent from Q4 2020 ($4,966) due to higher demand and lender confidence. 

Total Consumer Debt Continues to Grow

Overall consumer debt is $2.2 trillion, an increase of 7.9 per cent when compared to Q4 2020. On an individual basis the average consumer debt (excluding mortgages) is now $20,686, a drop of 0.6 per cent when compared to Q4 2020. 

“The drop in auto and Installment loan debt has been the biggest driver in bringing down average debt this quarter,” said Oakes. “Overall average debt is low, but a small increase in average debt is visible across certain segments.”

Both new auto finance and comparable bank loan balances were down by 7.5 per cent and 1.5 per cent year-over-year respectively. Apart from the seasonal drop in demand, the delay in vehicle delivery due to supply chain issues has also slowed down new auto growth. 

Delinquencies Continue to Decline

Overall delinquencies remained low with mortgage delinquency at 0.11 per cent and non-mortgage delinquency at 0.86 per cent, both showing a year over year drop of 31.8 per cent and 20.7 per cent respectively.

However, a small increase in delinquency rates across certain product segments was visible towards the end of 2021. The 90+ day delinquency rate for credit cards rose by 2.7 per cent and non-bank auto delinquencies rose by 14.7 per cent when compared to Q3 2021. 

“High inflation is impacting how far a dollar stretches day-to-day for consumers,” added Oakes. “Delinquencies are likely on the upswing for the immediate future when you layer in the pull back of government support and COVID-19 restrictions still hurting businesses.”   

Age Group Analysis – Debt & Delinquency Rates (excluding mortgages) 

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

Province Analysis – Debt & Delinquency Rates (excluding mortgages)

* Based on Equifax data for Q4 2021