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Average new mortgage tops $300,000 for first time as consumer debt in Canada hits $2 trillion

About 12% of new credit taken by Canadians already deferring payment on existing debt

Consumer debt in Canada rose 3.8 per cent in the third quarter to $2.041 trillion, driven by the surging housing market and new auto loans, Equifax Canada’s latest report reveals.

Mortgage balances were up 6.6% from the year before and the average new mortgage loan rose 8.6% to exceed $300,000 for the first time.

“Homebuyers are largely the reason why we’ve crossed over the $2 trillion threshold,” said Rebecca Oakes, AVP of Advanced Analytics at Equifax Canada.

New auto loans were also up 11.7 per cent from last year and average auto loan amounts are at their highest level in four years. Oakes said car prices have increased as manufacturers have not been able to keep up with a rise in demand during the pandemic. There is speculation that consumers are buying more cars to avoid public transportation.

Overall average consumer debt rose to $74,897, up 3.3% from the same period last year. More than 3 million consumers have taken a payment deferral since the pandemic started in March; by the end of September, less than half of those were still deferring payments, said the consumer credit reporting agency.

Deferrals didn’t stop some people from borrowing, said Equifax. About 12% of new credit in the third quarter was opened by consumers who were already deferring payment on their credit file.

The 90-day delinquency rate for non-mortgage debt sank to 0.98 per cent, the lowest since 2014 and down 15 per cent from the third quarter of 2019.

“The low delinquency rates we’re currently seeing are likely being masked by deferral programs,” said Oakes. “There are some warning signs in early-stage delinquency on credit cards where consumers have missed one or two payments that we’re closely monitoring.”

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