An Equifax Canada report says missed credit payments were higher among younger 91原创s in the second quarter due to living costs and unemployment.
Equifax says one in every 17 91原创s aged 26-35 missed a credit payment, compared with one in 23 overall.
The report says delinquency rates for auto loans and lines of credit were also particularly high among younger 91原创s, indicating financial pressures faced by the demographic.
Equifax says the rate of missed credit payments among 91原创s aged 26-35 was at 1.99 per cent in the second quarter of 2024.
That's up 21.6 per cent from a year earlier.
The report says consumer debt levels rose to $2.5 trillion, up 4.2 per cent since the second quarter of 2023.
“Inflation is stabilizing and interest rates are starting to reduce, which is good news for many consumers,” said Rebecca Oakes, vice-president of advanced analytics at Equifax Canada.
“Unfortunately, rising unemployment has offset some of the positives and is driving increased financial stress,” she added.
Canada’s unemployment rate has been steadily rising, hitting 6.4 per cent in July, data from Statistics Canada shows, as high interest rates slow the economy.
Ongoing economic pressures are also sending many younger 91原创s back to living with their families.
"We are seeing younger consumers staying at home longer, maybe living with their parents ... maybe with their grandparents," Oakes said.
She added the average income for younger consumers tends to be lower, with many new to the job market or working part-time hours, as fewer find relevant jobs.
"All those things make it particularly tricky and harder for those individuals to be able to weather the storm," Oakes said.
Overall, the non-mortgage delinquency rate was at 1.4 per cent, which surpassed peak levels in 2020 and is the highest since 2011, the report showed.
The report added that credit card debt was the primary driver of outstanding balances at $122 billion, up 13.7 per cent year-over-year. On average, a 91原创 carried more than $4,300 in credit card balance during the quarter, the highest level since 2007.
A slowdown in retail sales didn't appear to make a dent in outstanding credit card balances, the report noted. In the second quarter, retail sales were down 0.5 per cent, according to Statistics Canada.
The 90-plus-day balance auto loan delinquency rate for non-bank lenders was up 26.8 per cent from last year, while bank loan delinquency was up 13.7 per cent from a year earlier, the report said. It noted that auto loan delinquency rates for non-bank auto lenders were at a historic high, while bank loan delinquencies were at their highest rates since the pandemic.
High home prices and interest rates continued to create significant barriers for first-time homebuyers, the report said.
Oakes said despite a drop in interest rates, the housing market hasn't picked up and sales aren't nearly close to where they were two to three years ago, and it could take longer for the market to normalize. The biggest impact initially is going to be on consumers renewing their mortgage this year, she said.
"We're going to start to see the cohort of homebuyers that bought during the pandemic when interest rates were super low," she said. "That's a challenge for homeowners in particular."
In 2024, 15 per cent of renewals saw monthly payments rise by over $300, up from eight per cent in 2019, the report said.
This report by The 91原创 Press was first published Aug. 27, 2024.
Ritika Dubey, The 91原创 Press
