Posthaste: Consumer debt balloons to $2.4 trillion as newcomers to Canada rush to borrow
Immigration is helping fuel a surge in the consumer credit market, just as high interest rates and inflation push Canadians to take on a record amount of personal debt.
Total consumer debt hit $2.4 trillion in the fourth quarter, a 2.9 per cent increase from last year and a fresh record, according to a report from TransUnion of Canada Inc. Around 92 per cent of credit users carry a balance, a 3.7 per cent increase over last year.
More people are also using credit than ever before. Roughly 96 per cent of those eligible, or 31.5 million people, use at least one product to borrow money, such as a credit card, auto loan or mortgage. That represents a 3.6 per cent increase over last year, with people new to using credit adding $1 billion to balances over the past year, TransUnion said.
A surge in newcomers is helping drive those gains. The volume of people new to the country who opened a credit account for the first time has ballooned 46 per cent from 2022 to 2023, TransUnion said, and left those new residents of Canada with $3.5 billion in debt.
Those balances are only expected to grow. “These new consumer’s credit wallets are likely to expand as they make Canada their new home,” Matthew Fabian, a director at TransUnion Canada, said in the news release.
Meanwhile, high interest rates have made it more expensive to pay down all that debt. Monthly minimum payments are on the rise, with the average mortgage bill increasing 12 per cent over the past year. Additionally, credit card payments grew by 11 per cent, auto loans by six per cent and lines of credit by 13 per cent, TransUnion said. As a result, more people are missing payments. Delinquency rates rose for the third-straight quarter, while the number of people defaulting on
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