December Consumer Credit Insights: You Asked, Expert Answered

House prices and credit are top of mind for consumers as interest rates continue to rise. With increased living costs, consumers may begin to feel financial stress. In a recent Equifax survey, 50 percent of Canadians indicated that they feel comfortable about their personal economic outlook. 

Understanding the current consumer credit trends can help in making informed decisions about your credit risk strategy. Here are some questions asked during the Equifax Q3 2022 consumer credit trends and economic outlook webinar and answered by Rebecca Oakes, Vice-President of Advanced Analytics at Equifax Canada.


Will the demand for credit continue to rise as government support and savings dwindle?

Based on historic data trends, we would expect to see demand for credit continue to increase. However, there are two sides to the story in our current economy. On one side, some consumers are in a relatively good financial position due to accumulated savings during the pandemic period. Despite high inflation, these consumers may not necessarily need to lean on credit despite the increased cost of living.

The flip side is that some consumers may have found themselves in a better position during the pandemic and managed to accumulate some savings but the higher living costs have already consumed that benefit, they may be starting to feel economic hardship and relying more on credit. Part of the new credit uptake we’re seeing is likely from those people who are feeling financial stress from sustained increased living costs and are taking on more debt as a result. It is expected that credit demand will continue to rise within that segment of consumers.  

Any Insights on when house prices will drop?

The housing market is slowing down with the number of first-time home buyers dropping by 28.1 percent in Q3 compared to the same period in 2021. The average loan amounts of these first-time home buyers were two percent higher than in 2021 due to increased interest rates. 

In the near term, a significant housing price drop is not foreseen, but there may be a slowdown in the rate of house price increases. Thinking longer term during 2023 and into 2024, we likely will see prices fall if interest rates remain high. Not only are higher interest rates directly impacting those with variable rate mortgages, consumers who are in fixed-rate mortgages nearing the end of their existing term periods may become impacted also. These consumers could be met by shock in their future mortgage payments which could impact housing demand and prices. This, however, depends on economic conditions regionally and could take a reasonably long time for the market to hit lows. 

Are we starting to see the impact of interest rates yet? And if not, what should consumers be looking out for?

Higher interest rates in 2018 and 2019 following the lows during 2017 resulted in increased delinquencies and consumer proposals in the months leading up to the pandemic. This latest period of interest rate rises has been large in magnitude and very rapid but the true impact may not become visible until the 2nd half of 2023. In 2023, delinquency rates are expected to return to and may exceed pre-pandemic levels by the end of the year.

The good news is that delinquency levels are starting from a much lower level than in 2018 and the job market has been strong for several months. This lower level is partly due to the pandemic, where some consumers were able to accumulate increased disposable income and savings which serves as a financial buffer. 

Although historical information can only be used as an estimate, a rise in delinquency is certainly expected. These levels will be dependent on what happens with inflation and how quickly interest rates stabilize or potentially decrease. 


Do you have further questions about consumer credit trends? Sign up to Attend our Quarterly Credit Trends Webinars and Receive our Latest Economic Insights Reports.

We want to help Canadians live their financial best. For further questions, you can also reach us by contacting your Equifax Account Representative or directly at 1-855-233-9226 and follow us on Twitter and LinkedIn.  


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