Household debt up 4.2 per cent, rising to $2.34 trillion in Canada: TransUnion report
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A recent report from TransUnion shows a 4.2 per cent increase in Canadian household debt compared to the previous year, while the average credit card balance now stands at $4,000
With the cost of living consistently on the rise, more Canadians are continually turning to credit, with the average credit card balance now standing at $4,000, according to a new report from TransUnion.
Data that came from the TransUnion’s Q2 2023 Credit Industry Insights Report shows a 4.2 per cent increase, or $94.8 billion, in Canadian household debt compared to the previous year, with a total debt of $2.34 trillion for Canadians.
According to the report, this growth was primarily fueled by mortgage loan debt, which has maintained a consistent pace of growth for the fifth consecutive quarter at a nine per cent year-over-year increase, as existing home sales rebounded.
To assess Canadians' financial management and debt handling, TransUnion examined demand, supply, consumer behaviour, and performance for its Credit Industry Indicator metric. In the second quarter of 2023, this analysis resulted in Canada achieving a Credit Industry Indicator score for of 106, marking a 1.6-point increase compared to the same period in 2022.
However, the current Credit Industry Indicator levels are in line with pre-pandemic levels, with a slight year-over-year increase driven by increased credit demand.
According to the report, increased debt levels and rising interest rates have led to increased minimum payments, placing additional strain on already financially stressed consumers.
The report also highlights that while Canadian credit consumers have historically shown resilience, there are now signs of some individuals, such as Gen Z, who are in their early careers struggling in this higher interest rate environment.
