Newcomers and consumers who borrowed money for the first time in the past 12 to 36 months saw the biggest rise in missed payments, compared with the same consumer group last year, Equifax’s report published Tuesday, showed.
“Recent newcomers to Canada are facing challenges in navigating the Canadian financial economy. Historically, newcomers have demonstrated strong credit performance in the first few years of being in the country,” said Rebecca Oakes, vice-president of advanced analytics at Equifax Canada, in a statement.
“However, rising unemployment levels combined with high inflation in the last few years has likely added significant financial pressure to this group,” she added.
The bureau said more than 1.3 million consumers missed a credit payment in the third quarter, up 10.6% from a year ago.
Are Bank of Canada rate cuts helping?
Despite an elevated delinquency rate, Equifax said the pace of missed payments has begun to slow following recent interest rate cuts.
Another credit bureau, TransUnion, said on Tuesday total consumer credit debt rose 4.1% in the third quarter year-over-year as more gen Z consumers entered the credit market—making them the fastest-growing segment to carry an outstanding balance.
It said about 45% of the total household debt in Canada is held by millennial and gen Z consumers, who hold $1.1 trillion in outstanding balances.
TransUnion also said consumers are now facing higher minimum payments, especially for mortgages, which have risen 11% year-over-year.
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