If you're one of the many Canadians just barely able to cover all their monthly bills and debts, credit rating agency Equifax has bad news for you: It's not about to get any easier.
Canadians are doing a good job of making their debt payments these days, but evidence is building that this may be coming to an end, Equifax warned in a report released Thursday.
"While credit performance has stayed on a healthy trajectory, there are some early indicators that have started to shift," said Regina Malina, senior director of decision insights at Equifax Canada, in a statement.
Watch: What happens when there's an interest rate hike? (Story continues below)
She noted that the share of credit card holders paying their balance in full each month has fallen, and that's a sign of higher delinquencies ahead. Equifax says its research shows people who don't pay their credit card in full "are much more likely to miss" an upcoming payment.
"As unemployment holds at current levels and interest rates are likely to rise, we suspect delinquency rates to move modestly higher by year-end," Malina said.
The Bank of Canada has hiked its key lending rate three times since the middle of last year, and until recently, the experts largely expected it to hike interest rates again next month.
But the odds of a rate hike were dampened by a spate of bad economic reports last week, which showed inflation coming in lower than expected and retail sales falling in Canada — a sign that Canadian consumers may be getting tapped out, amid high debt levels and rising interest rates.
Earlier on HuffPost Canada:
Those debt levels are finally beginning to moderate.
In the wake of new mortgage rules that reduced home-buying power by an estimated 20 per cent, Canadians are taking on debt at a slower pace than before (though perhaps not by choice), and households' debt-to-income ratio is beginning to improve after hitting record highs last year, Statistics Canada data shows.
"Credit fatigue may finally be settling in for Canadian consumers," Equifax said.
'Credit performance remains incredibly strong'
Still, the amount of debt Canadian households are carrying, including mortgage debt, rose to $1.828 trillion in the first quarter of this year, up 5.7 per cent from a year earlier, Equifax said. Auto loans jumped 8.3 per cent and mortgage loans rose 5.9 per cent.
But for the time being, Canadians are managing their payments. The percentage of debt payments that were 90 days overdue dropped to just 1.08 per cent in the first quarter, Equifax said, from 1.15 per cent a year earlier.
"Overall credit performance in Canada remains incredibly strong," Malina said.
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