In its third quarter report, the union reveals that average household debt excluding mortgages rose to $21,686 in the three months to the end of September 2016, up 2.3 per cent from a year earlier.
It forecasts that there will be a slight increase to $21,747 by the end of 2017 with $22,000 reached in 2018. Provincially, there was a sharper rise in household debt in Quebec (3.6 per cent) and Ontario (2.6 per cent).
“Canadians continued to add debt in the third quarter, with balances increasing across most loan types,” said Jason Wang, TransUnion’s director of research and analysis in Canada. “The recent government outlook of weak economic conditions may have led some consumers to believe low interest rates will be here for a long time, which could result in pushing balances even higher due to low expected borrowing costs.”
Wang said it was important that lenders continue to stress-test their portfolios for when interest rates do eventually rise, especially considering TransUnion data showing that a rise of just 0.25 percentage points would see 700,000 struggle to make ends meet.
For now, serious delinquencies (90+ days) remain stable at 2.70 per cent (2.62 per cent a year ago) but there was a jump in the third quarter in Alberta (13.4 per cent) and Saskatchewan (11.9 per cent). By the end of 2017, TransUnion forecasts a national rate of 2.63 per cent.
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Canadians’ household debt has risen again and is not expected to ease anytime soon, TransUnion credit union says.