Millennials and Gen Zs held a combined $1.1 trillion in outstanding balances, up 10% year-over-year. Gen Zs increased their credit participation the fastest as they expanded beyond credit cards. Across all age groups credit participation was up 2.5% with more than 32 million Canadians having at least one credit product. Reduced interest rates and inflation was one of the drivers.
But the report warns that the health of the Canadian consumer credit market, as measured by TransUnion’s Canada Consumer Credit Index, declined to its lowest level since 2021 (99.8) in the fourth quarter, while December’s reading was the lowest since 2020.
Delinquencies rising
With delinquencies a concern, lenders have been tightening their criteria, which has brought down the pace of credit card originations. Balances for these products are also beginning to stabilize with average credit card debt per borrower at $4,681 in Q4, up 6% year-over-year. But this growth rate was down from 7.2% year-over-year in Q4 2023.
The number of non-bankcard delinquencies reported has increased even though economic conditions, notably employment, are relatively stable.
Overall serious consumer delinquency continues to rise on a year-over-year basis, up 16 basis points to 1.83% and reaching a five-year high, back on par with the pre-pandemic levels. Gen Zs are driving this increase.
