Roughly three-quarters of Canadian credit debt consists of mortgage payments, according to TransUnion Canada’s Q2 2024 Credit Industry Insights Report.
The new report found Canada’s total credit debt grew by 3.2% year-over-year to a record $2.41 trillion. Mortgage debt comprised 74% of the outstanding balances.
The average minimum monthly payments made by Canadian borrowers grew up 13.5% from $2,071 in the second quarter of 2023 to $2,350 in this year’s second quarter – the represented the largest year-over-year increase of any credit product. The average balance carried by Canadian mortgage holders was $364,803, up 3.73% from the $351,692 average in the second quarter of last year.
Across Canada, new credit openings grew year-over-year by 10.4%, representing $77.9 billion in balances – but this was driven by credit cards, with new credit card balances growing 7.5%, a growth attributed by the influx of Gen Z consumers into the credit market. In comparison, new mortgage originations stalled as elevated interest rates continue to keep some buyers out of the housing market.
“If the Bank of Canada continues to reduce interest rates, payment pressures may ease; however, lenders need to carefully monitor consumer behaviors, and predict and identify resilient versus vulnerable borrowers,” said Matthew Fabian, director of financial services research and consulting at TransUnion Canada. “Our analysis shows that a 50 bps decrease in mortgage interest rates from current levels could reduce mortgage payments by 12% or more for new or renewable mortgages openings in the coming months and help reduce the number of Canadians that are unable to make their monthly payment.”
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