Newcomers and first-time homebuyers in the past 12 to 36 months saw a significant increase in defaulted payments, compared to the same group of homebuyers last year, an Equifax report published Tuesday showed.
“Newcomers to Canada face challenges in using the Canadian economy. Historically, newcomers have shown good credit performance in their first few years in the country,” said Rebecca Oakes, vice president of advanced analytics at Equifax Canada, in a statement.
“However, rising unemployment rates combined with high inflation over the past few years are likely to add significant financial pressure to this group,” he added.
The bureau said more than 1.3 million consumers missed credit payments in the third quarter, an increase of 10.6% compared to last year.
Is the Bank of Canada’s rate cut helping?
Despite the high delinquency rate, Equifax said the pace of missed payments has begun to slow following recent interest rate cuts.
Another credit bureau, TransUnion, said Tuesday that 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 of balance management.
It said about 45% of total household debt in Canada is held by millennial and gen Z consumers, who hold $1.1 billion in outstanding balances.
TransUnion also said consumers are now facing higher minimum payments, especially for mortgages, which are up 11% year over year.
Source link
