By Thomas I. Likness
EBC Edmonton Bureau

EDMONTON (Eagle News) — For the first time in more than a decade, consumer debt loads in Canada have dropped, albeit just a fraction, according to Equifax Canada.

In a report released Tuesday, the Credit reporting agency said average non-mortgage debt dropped by 0.5% in the first quarter of 2020, largely due to a huge drop in consumer spending.

“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. “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.”

The average Canadian had $23,386 in consumer debt by the end of March compared to a year earlier, the agency reported, with the most significant decline being in the 18 to 25 year old age group.

According to the report, younger people and older people borrowed less money which people between the ages of 46 and 65 borrowed more.

As far as delinquency and bankruptcy rates, the agency reported the 90+ day delinquency rate for non-mortgage debt rose by 1.22 per cent to 8.99 per cent.

Overall, younger borrowers had more stable delinquency rates in the early phase of the pandemic, which may partly be reflected in the increased use of payment deferrals, the report observed.

“The delinquency trend rose again in Q1, but it was not a real reflection of COVID,” added Johnston. “Bankruptcies finally slowed and we know April was also very low as services shut down. Unfortunately, that trend will likely not continue, as we expect delinquencies and bankruptcies to rise in the latter part of the year.”

(Eagle News Service)