TransUnion Q3 2018 Industry Insights Report

Despite a potential slowdown in the Canadian economy over the next year, the Canadian consumer credit market is expected to see continued growth in consumer-level debt and no significant increases in delinquency rates. Challenges from softening labour markets, higher interest rates and a tapering North American economy mean that decreased growth is likely forthcoming in most provinces.

This slowdown in economic activity may impact consumer spending and employment levels, which could put continued stress on consumers’ capacity to service debt.

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Canadian consumers still display strong credit performance. The overall risk tier mix of Canadian consumers has improved with 68% of consumers with credit ranked prime or better — a 1.6% increase over last year. The super prime segment grew the most with a 3.2% increase, while subprime consumers in Canada declined by 0.5% from last year.

Matthew Fabian

“In our most recent quarter, consumers in serious delinquency decreased 26bps from prior year at 5.25%. Q3 2018 marks the lowest consumer delinquency rate we’ve seen in two years.”

Matthew Fabian, Director, Research and Industry

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

90+Day Consumer Delinquency Rate

Canadian consumers are still building up debt, with total non-mortgage consumer debt rising to $29,967 in Q3 2018, a 3.9% increase over the same period last year. However, the rate at which the debt burden is increasing has slowed — non-mortgage consumer debt grew by 1.5% from the previous quarter, compared to a 1.7% quarterly increase during the same period last year.

“Canadian consumers seem to have significant resiliency as we’ve seen average non-mortgage debt climb to almost $30K while serious delinquency rates have dropped 26 bps over the same period.”

Matthew Fabian, Director, Research and Industry Insights

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)

Looking ahead to 2019

The Canadian consumer credit market has performed very well over the past several years, with solid growth supported by strong economic fundamentals. Looking ahead, there are signals of a mild economic slowdown emerging, which presents an ideal opportunity for businesses, lenders and consumers to plan ahead.

While nationally our forecast predicts a slight decline in delinquency, we note there’s potential for regional shocks across Canada. Some of these may be localized, while others may have a broader impact. These include impacts of steel and aluminum tariffs on manufacturing, continued decline in oil prices, and industry disruption like the recent news of GM plant closures in Oshawa.

“Overall, our outlook remains positive that the Canadian credit market is operating efficiently, and despite some potential headwinds, still represents growing opportunities and balanced risk.”

Matthew Fabian, Director, Research and Industry Insights

Average Consumer Balance, by Product

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