Consumer debt snowballs to $1.4T

Canadians' consumer debt load continued to snowball last year, rising nine per cent to$1.422 trillion, according to a new survey from the creditrating agency Equifax Canada.

Total consumer debt increased by 4.5 per cent between the thirdand fourthquarters of 2013 and by 9.1 per cent when compared with a year earlier, when Canadians owed a total of $1.303 trillion.

Consumers' average debt rose two per cent year-over-year, but Equifax said that while Canadians needto be vigilant aboutrising debt, generally, consumers have been handling their debt well.Consumer bankruptcies, for example, are on the decline, dropping by seven per cent between November 2012 and 2013.

"Consumers and lenders continue to be responsible in how they're using credit," said Regina Malina, director of modelling and analytics atEquifax Canada. "In short, monthly payments are being made."

Still, Canadians'debt load continued to grow last year in all respects, withcredit balances,limits and
volume all rising year-on-year.

The size of mortgage debt and instalment loans increased by about 12 per cent each between the fourth quarters of 2012 and 2013while credit card debt was up almost six per cent, with Canadians owing $81.6 billion on their credit cards in the fourth quarter of 2013.

Mortgages account for the bulk 63.6 per cent of Canadians' debt, and stood at $903.8 billion in the fourth quarter. Bank revolving loans and instalments loans make up the next biggest chunk accounting for 17.6 per cent ($249.9 billion) and 8.8 per cent ($125 billion) of consumer debt, respectively.

Credit card debt made up 5.7 per centofthe debt load in the fourth quarter while car loans accounted for 3.9 per cent, or $56.1 billion.

Debt load defies gravity, analyst says

The rising debt load is "a number that seems to defy gravity," said Cristian deRitis,senior director of consumer credit economics at Moody's Analytics, in a news release."Debt service ratios, however, are stable indicating that most households have adequate income to service their debts."

The overall delinquency rate, which captures the percentage of loans that have gone unserviced for 90 days or more, was 1.12 per cent in the fourth quarter of last year, down slightly from 1.19 per cent in the same period in 2012.

Quebec residents were the best at servicing their debts, with a delinquency rate of 0.98 per cent while residents in Eastern Canada had a harder time making payments and had a delinquency rate of 1.42 per cent.

Among major cities,Calgary and Edmonton had the fewest delinquent debts with less than one per cent of loans delinquent, whileToronto had the highest delinquency rate, at 1.5 per cent.

In terms of debt load, the biggest increase was in Edmonton, where consumer debt rose 5.3 per cent in the fourth quarter when compared with the same period in 2012. By comparison, consumer debt in Vancouver dropped 4.5 per cent in that same time.

Equifax based its results onthe 25 million consumer credit files it has in its database. The company said it registers about 105 million credit transactions per month.