Canadians are more in debt than a year ago

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Canadians are more in debt than a year ago

Consumer debt in Canada rose 8.2% in the second quarter from a year ago, according to Equifax Canada.

Total consumer debt rose again in Canada in the second quarter of the current year, this time by 8.2% compared to last year, according to the latest report from the consulting firm. x27; Equifax Canada financial analysis. The debt of all Canadians now totals $2.32 trillion.

According to the report by the credit rating agency, the increase in new lending and higher inflation-related spending helped push total consumer non-mortgage debt to $591.4 billion, up 5.2% from a year ago.

Average non-mortgage debt per consumer was $21,128 in the second quarter, up 2.4% from a year earlier.

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Vice President of Advanced Analytics at Equifax Canada, Rebecca Oakes, points out that financial stress is becoming a reality for many more Canadians.

The impact on consumer credit is not only visible in everyday credit card spending, but also in other non-mortgage debt like car loans and lines of credit, where balances are up, Oakes noted.

Credit card balances hit their highest level since the fourth quarter of 2019, Equifax said.

Credit card spending is at historic highs, Oakes said. Strong consumer demand for credit cards translates into a competitive market for lenders. As a result, the credit limits offered for the new cards are much higher than in previous periods.

Equifax says the average credit limit on the new cards is over 5800 $, the highest in the past seven years.

The report also indicates that the volume of new mortgages fell 16.4% in the second quarter, compared to the same period last year, in a slightly less active housing market in recent months.

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Despite the slowdown in the housing market, the average loan size for first-time homebuyers fell only 0.5% in the second quarter compared to the first quarter, with average monthly payments increasing by 10%.

The average mortgage for first-time home buyers is $430,000, compared to the average of $367,000 for new mortgages.

The downturn in the real estate market in Canada is far from synonymous with increased affordability, Ms. Oakes argued.

Affordability depends not only on house prices, but also on the monthly repayment obligations associated with mortgages. Higher interest rates, coupled with high inflation, actually contribute to higher monthly consumer spending; many may struggle to qualify for a mortgage.

The report says the average loan size for new mortgages in Canada was over $367,000, with average loans for first-time home buyers at more than $430,000.

Equifax also noted that consumer insolvency has reached the highest levels high since the start of the pandemic, mainly due to an increase in consumer proposals.

The report comes as economists anticipate a sharp rise in interest rates on Wednesday. x27;interest from the Bank of Canada, a way for the central bank to fight inflation.

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