TransUnion Q1 2018 Industry Insights Report

Spurred by improved economic conditions and the continued recovery in oil prices, TransUnion’s latest Canada Industry Insights Report found that oil producing regions such as Alberta and Saskatchewan are beginning to experience significant improvements in their respective consumer credit markets. The first significant annual decline for these two provinces was observed during the first three months of the year. TransUnion found that consumer 90+ delinquency rates dropped significantly in both provinces (-15 basis points in Alberta and -39 basis points in Saskatchewan).

The report also found that the overall risk tier mix of Canadian consumers improved in Q1 2018 with 68% of consumers with credit ranked Prime or better – a 2.2% increase over last year. The Super Prime segment grew the most with a 76-basis point increase while subprime consumers in Canada declined by 36 basis points from last year.

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

Matthew Fabian

"While we continue to see strong credit performance on an annual basis, the rising interest rate environment may be impacting some consumers, though it appears on a limited basis at this time."

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

90+Day Consumer Delinquency Rate

"We may be seeing the beginning of the consumer rebound in the oil producing regions out west. Economic conditions have been improving for a few quarters as employment improves across the country."

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).

TransUnion also found that consumers in the oil region also are limiting their debt exposure. Average non-mortgage debt balance per consumer in Alberta and Saskatchewan grew below the national average in Q1 2018 from the previous year, at 1.9% and 2.5% respectively.. The national average rose 4.5% in that same timeframe to $29,181.

Additionally, despite new mortgage qualifying rules that came into effect in January 2018, TransUnion observed a slowing in origination volumes in Q4 2017. Originations are viewed one quarter in arrears to account for reporting lag. Between Q4 2016 and Q4 2017, mortgage origination volumes were down by 8.8%.

"We observed a slowing in origination volumes everywhere except in British Columbia, while balances continued to grow nationwide,” said Fabian. “Are consumers taking a wait and see approach to the new qualifying rules that came into effect? Are they pausing to measure the effect on home prices? One would have thought that consumers would rush in before the new rules to ensure they qualify for the highest amount, but they don’t appear to have done that. We will be observing the mortgage market closely in the coming quarters to determine assess the impact."

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

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