Delinquency rates for consumer credit are soaring in Alberta, according to a report released Tuesday by Equifax Canada.
The average debt (excluding mortgages) was $28,615 in Alberta in the first quarter of the year which was down 1.72 per cent from a year ago, but the delinquency rate of 1.58 per cent rose by 11.79 per cent.
Nationally, the average debt of $23,386 was down 0.47 per cent but the delinquency rate of 1.22 per cent was up 8.99 per cent from a year ago.
“With stores and restaurants shut down, consumers were able to cut back on their spending in March as retail sales numbers indicated,” said Bill Johnston, Equifax Canada’s Vice President of Data & Analytics, in a news release. “The result was a plunge in credit card spending that translated into much lower balances. That trend gained momentum in April, with few signs that consumers are looking to debt for support in the early days of the pandemic.”
In Calgary, the average debt (excluding mortgages) fell by 1.97 per cent to $29,316 while the delinquency rate soared by 13.36 per cent to 1.43 per cent.
In Edmonton, the average debt of $27,915 fell by 1.62 per cent from a year ago while the delinquency rate of 1.65 per cent was up 10.9 per cent.
Fort McMurray’s average debt rose by 1.23 per cent to $39,488 and the delinquency rate increased by 7.89 per cent to 2.01 per cent.
Equifax said the latest report on Canadian consumer credit provides a view into the early impact of the COVID-19 shutdowns. Average non-mortgage debt dropped 0.5 per cent in the first quarter of 2020 reflecting the significant drop in consumer spending in March. This is the first decline in average balances in more than a decade, it said.
In total, average debt per person rose to $73,030, an increase of 2.4 per cent compared to the first quarter of 2019. Total outstanding debt was up 4.3 per cent to $1.989 trillion dollars. Despite the pandemic, mortgages continued to gain upward momentum, rising 5.7 per cent compared to 2019. This growth reflects home sales prior to the economic shutdown, as activity slowed considerably by the end of March, said Equifax, adding that the impact of the pandemic has been most evident in the volume of consumers looking for new credit.
Inquiries from lenders dropped significantly in mid-March and early April. This is a good indicator of credit demand. The trend has been improving in recent weeks, led by mortgage and auto financing, it said.
“Our data showed the sudden drop in credit demand as the economy shutdown in late March,” said Johnston. “Those industries more dependent on physical retail locations were the most impacted, but it appears the worst is behind us.”
