TransUnion Q3 2017 Industry Insights Report

A combination of a slight cooling off of the Canadian economy and the effect of increases in interest rates may apply some pressure to overall consumer credit performance in 2018. Despite these obstacles, findings from TransUnion’s latest Industry Insights Report show that Canadians should maintain relatively stable delinquency levels next year.

The serious delinquency rate at the consumer level for non-mortgage debt is expected to be essentially unchanged next year, with a projected increase of two basis points (2 bps) from 5.63% in Q4 2017 to 5.65% in Q4 2018. The serious mortgage delinquency rate is also expected to be essentially neutral in the coming year, remaining at 0.56% in Q4 2017 and 0.55% in 2018. The largest divergence in serious delinquency performance is expected with general-purpose credit cards. TransUnion projects the serious delinquency rate to rise from 3.02% in Q4 2017 to 3.63% in Q4 2018.

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TransUnion Q3 2017 Industry Insights Report

A combination of a slight cooling off of the Canadian economy and the effect of increases in interest rates may apply some pressure to overall consumer credit performance in 2018. Despite these obstacles, findings from TransUnion’s latest Industry Insights Report show that Canadians should maintain relatively stable delinquency levels next year.

The serious delinquency rate at the consumer level for non-mortgage debt is expected to be essentially unchanged next year, with a projected increase of two basis points (2 bps) from 5.63% in Q4 2017 to 5.65% in Q4 2018. The serious mortgage delinquency rate is also expected to be essentially neutral in the coming year, remaining at 0.56% in Q4 2017 and 0.55% in 2018. The largest divergence in serious delinquency performance is expected with general-purpose credit cards. TransUnion projects the serious delinquency rate to rise from 3.02% in Q4 2017 to 3.63% in Q4 2018.

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90+Day Consumer Delinquency Rate YoY Changes for Non-Mortgage Loans

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Matthew Fabian

Though Canadians should continue to perform quite well in 2018, it is not unexpected that credit cards are forecast to see the largest rise in delinquency levels next year. The expectations for overall interest rate increases and a tempering of the Canadian economy in 2018 may play a role in forecasted higher card delinquencies.

Matthew Fabian, Director, Research and Analysis, TransUnion Canada

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Average Consumer Balance, by Product*

90+ Day Delinquency Rates

*Represents the average balance held by a consumer across each type of product (consumers can have multiple instances of same product).

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As consumer level delinquencies remain mostly muted, TransUnion’s forecast found that overall non-mortgage consumer balances will likely rise just under 1% in the next year, from a projected $22,249 in Q4 2017 to $22,440 in Q4 2018. Average consumer balances for general-purpose credit cards also are expected to rise from about $4,155 in Q4 2017 to $4,220 in Q4 2018.

In contrast, the average overall mortgage balance is expected to drop slightly to $239,056 in Q4 2018 from $240,029 in Q4 2017. Mortgages are the outlier in this instance, but some of this is due to the fact that recent steep increases in home prices also may take a pause.

Matthew Fabian, Director, Research and Analysis, TransUnion Canada

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