the rennie landscape - Q4 2019

credit and debt

CAR LOAN GROWTH ACCELERATES Most outstanding debt amounts held by Canadians grew more slowly last year, but not all.

As with the mortgage market indicators presented on the preceding pages, other debt indicators seem to be telling a similar story—that debt growth is reasonable and borrowers can largely afford their repayment requirements. In terms of outstanding balances, the 4.6% increase in mortgage debt between Q2 2018 and Q2 2019 was 32% lower than the 6.8% average annual growth seen over the preceding three years. A similar trend can be seen for home equity lines of credit (HELOCs) and in credit card balances.

If there are trends to keep a watchful eye on they would be the growth in auto loan balances and lines of credit (LOCs): the former rose by 7.1% in the past year, up from the previous three-year average annual rate of 6.7%, while the latter rose by 1.7% in the past year— relatively slow growth, but equivalent to almost eight times the annual rate of growth seen in the preceding three years. Debt of this nature will need to be reined in—particularly with auto loan balances rising by an unsustainable 7.1% annually. If not, delinquencies will rise, risking spillover into other debt categories.

GROWTH IN CAR LOAN BALANCES SPEEDS UP

8.0%

7.1%

7.0%

6.8%

6.7%

6.0%

6.0%

5.0%

4.6%

4.5%

4.2%

4.0%

3.6%

3.0%

2.0%

1.7%

1.4%

1.1%

1.0%

0.3%

0.0%

ALL $1,934.6

MORTGAGE $1,288.0

HELOC $205.5

CREDIT CARD $101.7

AUTO $78.2

LOC $60.0

OUTSTANDING BALANCE  BILLIONS

Q   Q  ANNUAL AVERAGE

Q   Q 

SOURCE: MORTGAGE & CONSUMER CREDIT TRENDS, CANADA MORTGAGE & HOUSING CORPORATION DATA: PAST 12-MONTH CHANGE, CANADA

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