Canadian Consumer Credit Market Finishes 2018 Strong, Though Some Areas of Softness Emerge

TransUnion’s (NYSE: TRU) latest Canada Industry Insights Report found that, while the consumer credit market ended 2018 on generally solid ground, some areas of softness are beginning to emerge. The report shows the impact of mortgage regulations and interest rate increases, as well as noteworthy shifts in credit demographics and areas of regional volatility.

With almost 29 million Canadian consumers having access to credit (up 1.1% year-on-year), aggregate levels of debt continue to grow. Overall, average non-mortgage consumer debt balances increased to $30,257, a 3.6% rise from the prior year. At the same time, serious delinquency rates held steady at 5.23%—a 7 basis point decline from Q4 2017. Most major credit products continued to exhibit balance growth and stable delinquency rates over the past year.

“It’s always important to monitor the consumer credit marketplace to identify significant changes or emerging trends. Our latest report shows that some new dynamics are developing that merit continued scrutiny, and may at some point require a strategic response if they develop further,” said Matt Fabian, director of financial services research and consulting for TransUnion Canada.

Q4 2018 Metrics for Major Credit Products

Credit Product

Average Balance Per Consumer – All Borrowers

Annual Change

Consumer-Level Serious Delinquency Rates(1)

Annual Change

Consumer Credit Cards




-10 bps

Auto Loans




-20 bps

Lines of Credit




-3 bps

Installment Loans




+8 bps





-3 bps

 (1) Serious delinquency rates are 90 or more days past due for credit cards and 60 or more days past due for all other credit products.

Mortgage Originations and Balances Continue to Decline

TransUnion found that new mortgage originations have declined in the last year, though there are no signs of performance weakness. In fact, serious delinquency rates dropped slightly YoY to 0.45% in Q4 2018.

New mortgage originations in Q3 2018 declined by 12.9% from the same quarter the prior year. This drop was more severe than the 3% decline the year prior (i.e., from Q3 2016 to Q3 2017). Originations are measured one quarter in arrears to account for reporting lag. The decline in mortgage activity is likely a consequence of the new mortgage qualifying rules, combined with the increased cost of borrowing as a result of higher interest rates. According to the Bank of Canada, the policy interest rate increased by 75 basis points between Q4 2017 and Q4 2018.

“It is clear from the data that mortgage originations have slowed materially,” said Fabian. “Consumers seeking to purchase new homes may find obtaining financing both more difficult and more expensive in the current environment. Even so, the fact that consumers with mortgages today are continuing to perform well and make timely payments speaks well of both lender underwriting practices in recent years and the focus consumers are placing on managing this largest component of debt in the wallet.”

The average new mortgage amount also declined to $280,700 in Q3 2018, a decrease of 3.6% from the same time the prior year—despite generally flat home prices over that period. The decline spanned all risk tiers: subprime consumers (those with a TransUnion CreditVision risk score below 600) experienced a 6.4% drop in average new mortgage amount, while near prime consumers (those with a TransUnion CreditVision risk score from 600 to 699) experienced a 6.4% drop in average new mortgage amount. These drops may be due in part to changes in where consumers are buying homes and the types of homes they are buying. It may also be driven to some extent by the new mortgage qualifying rules, as many consumers will qualify for lower mortgage amounts and may need to either seek smaller homes or provide larger down payments as a result.

Almost all Provinces saw declines in mortgage origination volumes from the previous year. British Columbia led all Provinces with a drop in origination volumes of 26.6% from the previous year, which was likely a result of the national mortgage rules but also driven in part by the additional measures adopted last year by the BC and municipal governments that were intended to provide stability to the housing market and control some of the speculation that had previously driven up home prices.

New mortgage originations by Province2


Q3 2018


Q3 Rank

Q4 Rank























































(2) Origination volumes are reported one quarter in arrears

Credit Market Shifts by Demographic

The latest Industry Insights analysis revealed some interesting trends across demographic groups. “Consumers across generations have different credit needs, but also different perspectives on the use of credit and diverse expectations of lenders,” said Fabian. “Changes in the generational mix of borrowers can have a material impact not just on overall portfolio behavior, but also on how lenders should market to and engage with their customers for maximum effectiveness.”

Millennials set to surpass Baby Boomers in the credit market

While Baby Boomers (consumers born 1946-1964) still make up the largest proportion of borrowers in the market at just over 30% of all credit-active consumers, Millennials (consumers born 1980-1994) are catching up—comprising just over 26% of Canadian borrowers. The Millennial cohort continued to grow at a rate of 2.8% during 2018, while Baby Boomers experienced a slight decline of 1.3% over the same time. If these trends continue, Millennials will overtake Baby Boomers as the largest percentage of credit-active consumers by 2022.

Millennials have the highest consumer delinquency rates, but are improving

Millennials had the highest consumer serious delinquency rate at year-end 2018 compared to other age groups, at 7.3%. However, the delinquency rate for Millennials fell over the last year, dropping 23 basis points from Q4 2017. This improvement reflects the continued growth of this generation in their experience in managing credit, as well as likely income gains as Millennials move into higher-income life stages.

Gen Z consumers experiencing rapid credit growth

Although Gen Z consumers (those born after 1994) only represent 7.7% of the Canadian credit-active population, they are growing at 29% annually. This generation carried the lowest average non-mortgage debt at $7,900, and that average balance grew the fastest YoY at 16.6% from Q4 2017, after a 23% growth between Q4 2016 and Q4 2017.

This generation also exhibited a serious delinquency rate of 6.1%, growing 24 basis points from the prior year. While on the surface one might expect Gen Z consumers to have higher delinquency rates than the more credit-experienced Millennial segment, it is likely that lenders approach Gen Z consumers with more conservative underwriting due to their new-to-credit status.

“Although delinquency rates are falling for the market overall, we do see increases in delinquency rates for the youngest segment of credit consumers. The Gen Z segment is still small as a share of the total market, and it is therefore not surprising that they are experiencing the highest growth rates. Their access to credit has also been empowered through the expansion of digital channels,” said Fabian.

Gen X consumers still hold the largest non-mortgage balances

Gen X consumers (born 1965-1979) held the highest average non-mortgage balances in Q4 2018 with an average of $43,600, growing 6.5% from the prior year. Driving this was a combination of factors: many in this generation are heading households with children and associated life stage expenses, which are often financed through debt. As well, many in this generation are in their peak career earning years, which gives them higher capacity to borrow and manage debt payments. The non-mortgage serious delinquency rate for Gen X consumers fell for the second consecutive year to 6.12%, down 19 basis points from Q4 2017, reflecting the continued ability of this segment to manage their debt obligations.

Regional Impact: Volatility in Alberta, Saskatchewan and Newfoundland

Volatility in the oil sector has persisted in Alberta and Saskatchewan. These Provinces saw year-over-year increases in consumer-level serious delinquency rates to 6.4% and 6.5% respectively in Q4 2018. The report also revealed an acceleration in insolvency rates within these Provinces—Alberta saw a two-year average annual growth rate in insolvency filings of 3.8%, and Saskatchewan experienced an annual growth rate of 4.7%. In contrast, the national growth rate in insolvency was only 1.4% over the same period. The majority of the increase is in consumer proposals, a contract in which a consumer negotiates to repay only a portion of his/her debt. There has been an increase nationally in the number of proposals vs. bankruptcies since changes to the Bankruptcy Act took place in 2008 that increased the amount of debt that could qualify under a proposal.

Similarly, Newfoundland has seen a rise in serious delinquency rates to 6.9% in Q4 2018, a 33 basis point increase from the prior year, as its economy continues to struggle. Insolvencies also increased by 21% in Newfoundland over the past two years, reflecting the recent weakness in oil prices compounded by a wind-down of major capital projects in the Province, which now has the highest unemployment rate in Canada.

While there is some regional volatility, it is important to note that the Canadian credit market generally remains on solid footing. Overall serious consumer delinquency rates remained steady at 5.23% in Q4 2018 and, despite regional variance, the overall insolvency rate in Canada is still less than 1%.

“Our previous forecasts for 2019 consumer credit performance remain unchanged, with the average non-mortgage debt balance increasing for Canadians to $31,000 by year-end 2019. We anticipate the overall non-mortgage delinquency rate will continue to fall to 4.7%,” said Fabian. “However, delinquency rates are sensitive to regional and wider macro-economic factors including (but not limited to) interest rates, unemployment, inflation and wage growth. Material changes to any of these economic variables from current levels could certainly impact these forecasts.”

More information about the TransUnion Canada Industry Insights Report, including details about a variety of credit products, can be found here. Among the details are more information about balance and delinquency trends, including for auto loans, installment loans, lines of credit and mortgage loans. Please visit the following website to register for TransUnion's Q4 2018 Industry Insights Report webinar scheduled for Feb. 21 at 1 p.m. ET.

About the TransUnion Canada Industry Insights Report

TransUnion’s Canada Industry Insights Report is an in-depth, full credit-active population-based solution that provides statistical information every quarter from TransUnion’s national consumer credit database, aggregated across virtually every active credit file on record. Each file contains hundreds of credit variables that illustrate consumer credit usage and performance. By leveraging the Industry Insights Report, institutions across a variety of industries can analyze market dynamics over an entire business cycle, helping to understand consumer behaviour over time and across different geographic locations throughout Canada. Businesses can access more details about and subscribe to the Industry Insights Report.

About TransUnion (NYSE: TRU)

Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion reaches consumers and businesses in more than 30 countries around the world on five continents. Based in Burlington, Ontario, TransUnion Canada provides local service and support throughout Canada. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide. We call this Information for Good. Visit to learn more.

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