credit and debt
TIME TO APPLY THE BRAKES TO AUTO APPEALS
Canadians have become more delinquent in the past year, with the rate of late payments increasing for all types of debt.
In and of itself, debt is not a bad thing and in fact, it can be a very useful tool if properly managed. The operative phrase here is “properly managed”, and it may not apply as much as in recent years when we consider trends in debt delinquencies. For each of mortgages, HELOCs, credit cards, auto loans, and LOCs, the delinquency rate rose between Q2 2018 and Q2 2019, from a low of +5% for LOCs to a high of +13%
for both auto loans and HELOCs. It’s worth noting that delinquency rates remain very low (ranging from 0.17% of HELOC holders to 1.88% of those with car loans), but it’s the direction of change that is most important as we chart our economic course for the next year and beyond. Along with us and others, the Bank of Canada will surely keep an eye on these trends as they set interest rates through 2020.
JIG'S UP? DELINQUENCIES INCH UP
2.0%
1.88%
1.59%
1.5%
1.0%
0.64%
0.5%
0.30% 0.17%
0.0%
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Q Q CHANGE
%
%
%
%
%
MORTGAGE
HELOC
CREDIT CARD
AUTO
LOC
SOURCE: MORTGAGE & CONSUMER CREDIT TRENDS, CANADA MORTGAGE & HOUSING CORPORATION
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