Canadian Consumer Credit Performance Remains Strong, Though Divergence in Some Loan Products Expected in 2018

TransUnion Industry Insights Report projects uptick in credit card delinquency rates

A combination of a slight cooling off of the Canadian economy and the effect of increases in interest rates may apply some pressure to overall consumer credit performance in 2018. Despite these obstacles, findings from TransUnion’s (NYSE: TRU) latest Canada Industry Insights Report show that Canadians should maintain relatively stable delinquency levels next year.

The serious delinquency rate at the consumer level (90 days or more past due for credit cards; 60+ days past due for all other credit products) for non-mortgage debt is expected to be essentially unchanged next year, with a projected increase of two basis points (2 bps) from 5.63% in Q4 2017 to 5.65% in Q4 2018. The serious mortgage delinquency rate is also expected to be essentially neutral in the coming year, remaining at 0.56% in Q4 2017 and 0.55% in 2018. The largest divergence in serious delinquency performance is expected with general-purpose credit cards. TransUnion projects the serious delinquency rate to rise from 3.02% in Q4 2017 to 3.63% in Q4 2018.

“Though Canadians should continue to perform quite well in 2018, it is not unexpected that credit cards are forecast to see the largest rise in delinquency levels next year,” said Matt Fabian, director of research and industry analysis for TransUnion Canada. “The expectations for overall interest rate increases and a tempering of the Canadian economy in 2018 may play a role in forecasted higher card delinquencies.

“We also have seen an uptick in the percentage of credit cards issued to consumers with non-prime credit scores over the past year. This shift may be a reflection of lenders’ desire to expand credit availability to more consumers, and improved confidence due to steady credit card performance in recent years. Higher-risk consumers are expected to have higher delinquency rates, but overall delinquency levels are forecast to remain within acceptable bounds.”

Previous TransUnion research has found that Canadian consumers facing liquidity constraints are more likely to pay their credit card debts last, preferring to keep their auto loans and mortgages in good standing if they are forced to choose. That research also found that Canadians generally place the highest priority on paying their mortgages, especially when there is a strong housing market. “Consumers with mortgages generally want to preserve the equity they hold in their homes, which is another reason why card delinquencies may rise while mortgage delinquencies remain flat,” added Fabian.

TransUnion also noted that the most recent Bank of Canada Monetary Policy Report was more cautious about the country’s economic outlook compared to recent reports. The Bank of Canada highlighted risks such as NAFTA, OSFI rule changes, weak exports and sensitivity of households to higher rates as contributing factors to potentially lower GDP numbers in the next few years.

Serious Consumer Delinquency Rates (60+ Days Past Due)


Q3 2017 (Current)

Q4 2017 (Projected)

Q4 2018 (Projected)

Mortgage Loans




Credit Cards




Total Non-Mortgage Credit Products




As consumer level delinquencies remain mostly muted, TransUnion’s forecast found that overall non-mortgage consumer balances will likely rise just under 1% in the next year, from a projected $22,249 in Q4 2017 to $22,440 in Q4 2018. Average consumer balances for general-purpose credit cards also are expected to rise from about $4,155 in Q4 2017 to $4,220 in Q4 2018.

In contrast, the average overall mortgage balance is expected to drop slightly to $239,056 in Q4 2018 from $240,029 in Q4 2017. “Mortgages are the outlier in this instance, but some of this is due to the fact that recent steep increases in home prices also may take a pause,” said Fabian.

Auto Loans and Lines of Credit Lead Strong Q3 Performance

Auto loans experienced continued strong performance in Q3 2017, as the number of new auto loans increased 9.4% from the previous year. Average balances grew 1.5% from Q3 2016 to $20,160. Serious delinquency rates grew by 9 bps to conclude the quarter at 1.93%.

“The auto purchase market continues to soar, reaching record sales levels, which is driving account origination and balance growth. With auto sales expected to top 2 million by year’s end, we see continued strong performance in the short-term,” said Fabian.

Lines of credit, which were utilized by 9.2 million Canadians as of Q3 2017, have regained some momentum after a prior period of muted activity. The number of consumers with access to a line of credit has risen 1.76% in the last year. The growth in volume has been driven by the least risky consumer segment, Super Prime, with overall annual growth at 3.7%. “Both existing and new credit lines increased 2.7% and 6.4%, respectively, suggesting renewed consumer demand and higher lender activity in this segment,” added Fabian.

Q3 2017 Canadian Consumer Credit Debt/Delinquency Picture


Average Balance

Annual% Change


Delinquency Rate*

AnnualBasis Point Change (bps)

Credit Cards




+5 bps

Installment Loans




-39 bps

Auto Loans




+9 bps

Lines of Credit




-13 bps

Mortgage Loans




- 8 bps

*Serious delinquency rates are 60+ days past due for all above credit products except for credit cards (90+ DPD)

More information about the Q3 2017 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 for auto loans, installment loans, lines of credit and mortgage loans. Please visit the following website to register for TransUnion's Q3 2017 Industry Insights Webinar scheduled for Dec. 7 at 2 p.m. ET.

About the TransUnion Canada Industry Insights Report

TransUnion’s Canada Industry Insights Report is an in-depth, full 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 at

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