TORONTO — A new Equifax Canada report says low interest rates and falling oil prices drove up consumer debt and delinquency rates in the third quarter.
The credit reporting agency found that average debt increased by 3.6 per cent to $22,081 in the quarter ended Sept. 30 compared to the same period last year.
As of the third quarter, Canadian consumers owed $1.702 trillion compared to $1.587 trillion a year earlier.
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Equifax says the percentage of people who are 90 days or more behind paying their debt grew to 1.14 per cent from 1.05 per cent during the same year-over-year period.
It says the increase in delinquency was largely driven by oil-producing provinces in Western Canada and Newfoundland and Labrador, where default rates tend to be higher.
Total consumer debt, excluding mortgages, remains on the rise fuelled in part by low interest rates, it said.
Canada's total household debt now exceeds the size of the country's economy. (Chart: Desjardins)
"What we are seeing in Western Canada and Newfoundland would be of more concern if people in the two regions hit hard by the oil bust were also piling on a lot more debt and they are not, especially in Alberta and Saskatchewan,'' Regina Malina, senior director of decision insights at Equifax Canada, said in a release issued Wednesday.
"The majority of consumers are actually decreasing their debt, but those who are still increasing it are adding larger amounts on average and by enough to increase the total levels. The fact is people who can afford to do so are buying more cars, spending more on housing and borrowing more from financial institutions.''
Equifax said auto and instalment loan sectors showed significant increases of 7.8 per cent and 7.7 per cent in the third quarter year-over-year, respectively.