Newcomers and consumers who borrowed money for the primary time within the last 12 to 36 months saw the biggest increase in missed payments in comparison with the identical group of consumers last yr, in line with Equifax’s report released Tuesday.
“Recent newcomers to Canada face challenges navigating Canadian finance. Historically, newcomers have shown strong credit performance in the first few years of their stay in the country,” said Rebecca Oakes, vice chairman of advanced analytics at Equifax Canada, in a press release.
“However, rising unemployment combined with high inflation in recent years has likely led to significant financial pressure on this group,” she added.
According to the bureau, greater than 1.3 million consumers missed a loan payment within the third quarter, a ten.6% increase from a yr earlier.
Will Bank of Canada rate cuts help?
Despite an increased default rate, Equifax said the pace of missed payments has slowed following recent rate of interest cuts.
Another credit reporting agency, TransUnion, said Tuesday that total consumer loan debt rose 4.1% yr over yr within the third quarter as more Gen Z consumers entered the credit market – making it the fastest-growing segment with outstanding balances .
It says about 45% of total household debt in Canada is held by Millennial and Generation Z consumers, who’ve $1.1 trillion in outstanding balances.
TransUnion also said consumers at the moment are facing higher minimum payments, particularly on mortgages, which rose 11% year-over-year.
