Canadian non-mortgage delinquencies reached "levels not seen since 2009" in the first quarter, while mortgage delinquencies in Ontario hit the highest point ever recorded by Equifax, according to the credit bureau's latest Market Pulse Consumer Credit Trends and Insights report.
In Ontario, the 90+ day mortgage delinquency rate rose to 0.24%, which marks a "substantial" 71.5% increase from a year ago, and British Columbia followed with a notable 33.3% increase in 90-day delinquencies — unsurprising given that these provinces are home to some of the most expensive housing markets in the country. Ontario also led the nation in non-mortgage delinquencies, up 24% year over year, followed by Alberta at 15.9% and Quebec at 13.9%.
While consumers in certain regions struggled to make credit payments, on the national level, spending was down. In Q1, the average monthly credit card spending amount fell by a remarkable $107, which is the lowest it's been since March 2022. The most drastic spending decreases were recorded in Ontario, BC, PEI, Nova Scotia, and the Yukon.
“A drop in credit card spending when combined with increased payment amounts can imply improving financial conditions of consumers,” said Vice President of Advanced Analytics at Equifax Canada, Rebecca Oakes, in the report. “Our data shows card payment levels, especially for younger consumers, are starting to fall, indicating this spending slowdown is likely driven more by consumers trying to be prudent rather than switching from credit to debit for financing.”
At the same time, missed payments continued to rise across most credit products, totalling more than 1.4 million credit consumers who were late on at least one payment last quarter. This equates to one in 22 Canadians missing credit payments — numbers not seen since the Financial Crisis.
Those with mortgages, however, were protected from excess financial strain last quarter, it seems. This was thanks, in part, to the stabilization of interest rates, however, for non-mortgage holders, especially young Canadians in that grouping, consumer level delinquency rates increased by a greater amount year over year. For mortgage holders, delinquency rates rose 6.5%, while rates grew by 8.9% for non-mortgage holders. Those aged 18 to 25 saw the most dramatic jump in delinquency rates at 15.1%.
On the topic of mortgage holders, existing homeowners made up the majority of new mortgage originations in Q1, which jumped 57.7% year over year. But it was renewals and refinancing that drove this surge in originations as the "Great Renewal" of COVID-era mortgages begins to take hold.
Notably, 28% of Canadians — so nearly one in three of those renewing or refinancing switched lenders — "reflecting intense competition among major lenders" as mortgage owners "shop around and seek better rates," reads the report.
“The shift in the mortgage market is clear — this is currently about existing homeowners navigating a complex refinancing environment,” says Oakes. “But even as some find relief, affordability challenges haven’t eased for everyone.”
One group facing affordability challenges are those first-time homebuyers. While first-time homebuyer market activity rose 40% from Q1 2024 and average monthly payments dropped by 7.8% to $2,300, their average loan size increased by 7.5% year-over-year.
Overall, total consumer debt in Canada was $2.55 trillion at the end of Q1, up 4% year over year, but down more than $6 billion from the end of 2024. As for non-mortgage debt, per consumer average debt increased to $21,859.
"Despite a slowdown in demand for non-mortgage debt, overall balances remained fairly flat, an indication that consumer payment levels may be falling," says Oakes. “[...] We're observing positive shifts in consumer behaviour, with reduced credit card usage and early signs of delinquency stabilization for some consumers. However, headwinds will likely persist, such as rising unemployment and rising food prices, in already strained regions."
