A recent Equifax Canada report indicated that missed credit payments were on the rise among younger Canadians in the second quarter of 2024. The report stated that one in every 17 Canadians aged 26-35 missed a credit payment, compared with one in 23 overall. Delinquency rates for auto loans and lines of credit were also significantly higher among younger Canadians, pointing to financial pressures faced by this demographic. The rate of missed credit payments among Canadians aged 26-35 was at 1.99 per cent in the second quarter of 2024, a 21.6 per cent increase from the previous year. Overall consumer debt levels rose to $2.5 trillion, up 4.2 per cent since the second quarter of 2023.
Rebecca Oakes, the vice-president of advanced analytics at Equifax Canada, highlighted the challenges faced by younger Canadians due to rising living costs and unemployment. She mentioned that while inflation is stabilizing and interest rates are decreasing, rising unemployment is counteracting some of the positive effects, leading to increased financial stress. The report noted that Canada’s unemployment rate has been steadily rising, reaching 6.4 per cent in July, as high interest rates are slowing down the economy. Ongoing economic pressures are causing many younger Canadians to move back in with their families, with lower average incomes and difficulties finding relevant full-time job opportunities.
The non-mortgage delinquency rate in Canada reached 1.4 per cent, surpassing peak levels in 2020 and representing the highest rate since 2011. Credit card debt emerged as a significant driver of outstanding balances, with Canadians carrying an average of over $4,300 in credit card debt during the quarter, the highest level since 2007. Despite a slowdown in retail sales, outstanding credit card balances remained high. The report also highlighted a significant increase in delinquency rates for auto loans, with non-bank lenders experiencing a 26.8 per cent increase in the 90-plus-day balance auto loan delinquency rate compared to the previous year.
High home prices and interest rates continued to pose challenges for first-time homebuyers, with the housing market showing signs of sluggishness despite a drop in interest rates. Oakes remarked that it may take longer for the housing market to normalize, impacting consumers renewing their mortgages this year. The report indicated that 15 per cent of renewals in 2024 saw monthly payments rise by over $300, compared to eight per cent in 2019. Overall, the financial landscape for Canadians in 2024 remains challenging, with a high level of consumer debt, increasing delinquency rates, and ongoing economic pressures impacting younger demographics in particular.
In conclusion, the Equifax Canada report sheds light on the financial challenges facing Canadians, especially younger individuals, in the second quarter of 2024. The rising trend of missed credit payments, increasing consumer debt levels, and high delinquency rates for auto loans and credit cards illustrate the financial strain experienced by many Canadians. Economic factors such as rising living costs, unemployment, and high home prices are contributing to these challenges, impacting consumers across the country. As the economy continues to face uncertainties, it is crucial for individuals to manage their finances prudently and seek support to navigate the evolving financial landscape.
