TransUnion Q2 2018 Industry Insights Report

At the midpoint of 2018, TransUnion’s latest Industry Insights Report found that even as Canadian credit obligations continued to increase, serious delinquency rates have been dropping. These trends indicate a consumer credit market that is healthy and continuing to expand. At the same time, while the level of consumer debt continued to grow in Q2 2018, the TransUnion report found that it was doing so at a slower pace after several years of robust expansion.

The overall risk tier mix of Canadian consumers has improved with 68% of consumers with credit ranked Prime or better – a 1.9% increase over last year. The Super Prime segment grew the most with a 2.7% increase while Subprime consumers in Canada declined by 36 bps from last year.

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90+Day Consumer Delinquency Rate YoY Changes for Non-Mortgage Loans

Matthew Fabian

“While consumer non-mortgage debt continues to rise, the rate of growth is slowing, and serious delinquency rates are down. This is happening even as interest rates continue to rise, which can often put strains on the consumer wallet.”

Matthew Fabian, Director, Research and Industry Insights, TransUnion Canada

90+Day Consumer Delinquency Rate

“Some consumers may be more cautious in adding to current debt levels as the cost of borrowing increases. However, prior TransUnion research has shown that the impact of rising rates may not be as great as some pundits might suggest. This, combined with growing net worth and low unemployment, point to continued strong Canadian credit performance”

Matthew Fabian, Director, Research and Industry Insights, TransUnion Canada

Average Consumer Balance, by Product*

Average Consumer Balance, by Product

*Represents the average balance held by a consumer across each type of product (consumers can have multiple instances of same product).

The average non-mortgage debt level per consumer rose to $29,648 in Q2 2018, a 3.9% increase over the same period last year. This is the third consecutive quarter where the quarterly change is less than the change seen in the previous year, potentially signaling an inflection point.

At the same time, there was a continued decline in defaults on consumer debt payments, with a 24 basis point drop in the consumer-level serious delinquency rate—the percentage of consumer 90+ DPD—to 5.33% in Q2 2018. This indicates that while there may be a slowing of consumer debt growth rates, consumers are still doing a good job of managing their current debt levels and are showing no immediate or widespread signs of being overextended.

“We found that 91% of Canadian consumers either remained in their same respective risk tiers or improved during the second quarter of 2018. This is great news for consumers, as more people seeking loans may be eligible for better rates.”

Matthew Fabian, Director, Research and Industry Insights, TransUnion Canada

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