08:54 AM

TransUnion Finds Canadians Increasingly Shift Debt to Lower Interest Rate Products

Report Takes a Closer Look at Greater Toronto Area Debt and Delinquency Picture

TransUnion’s Q1 2015 MarketTrends found that Canadians continue to prioritize installment loans, with balances rising more than 3% in the last year from $21,546 in Q1 2014 to $22,212 in Q1 2015. This increase was accompanied by the lowest credit card balances seen in the last four quarters. Additional information about the Q1 2015 TransUnion MarketTrends can be found here.

TransUnion’s database shows that the number of installment loan accounts has increased by more than 7%, jumping from 5.5 million in Q1 2014 to 5.9 million in Q1 2015. Delinquency rates (90+ days delinquent) for installment loans also saw the biggest drop of all credit products, declining nearly 15% from 3.75% in Q1 2014 to 3.20% in Q1 2015.

“Installment loans have long been valued by consumers because their lower interest rates make it easier to purchase high-end items such as living room furniture or new kitchen appliances,” said Jason Wang, TransUnion’s director of research and industry analysis in Canada. “Installment loans offer those consumers not able to readily access credit cards, or those who do not have large credit limits, the opportunity to make purchases they otherwise could not accommodate. Even for consumers with ample credit card limits, the high interest rates on those cards makes the choice a relatively easy one—most Canadian cards carry a fixed interest rate of 19.9%. Compared to lines of credit that also carry lower interest rates than credit cards, installment loans’ fixed payments are an appealing feature.”

Overall Consumer Debt/Delinquency Picture

Debt levels for Canadians remained stable in Q1 2015 compared to a year earlier, according to TransUnion’s report. Average balances per consumer (excluding mortgages) remained essentially flat, moving from $20,754 in Q1 2014 to $20,785 in Q1 2015. Debt levels also are similar to what was observed two years ago, when average balances per consumer stood at $20,814 in Q1 2013.

A more granular analysis of the country’s largest provinces and cities shows that the biggest yearly drop in debt occurred in Alberta (down 1.18%), driven by the decreases in its two largest cities – Calgary (down 2.59%) and Edmonton (down 2.05%). British Columbia, Ontario and Quebec all saw increases of less than one-half percent.

“We have been observing a de-leveraging trend in the two major cities in Alberta for several quarters,” said Wang. “These findings suggest that Albertans may be preparing for a localized economic slow-down caused by the oil slump, and some of them have likely reduced spending due to job losses. We are keeping a close eye on this region.”

Average Consumer Non-Mortgage Debt Levels of the Largest Cities


Debt at Q1 2014

Debt at Q1 2015

YoY Change

























From a delinquency standpoint, consumers are performing exceptionally well, with the 90-day or worse delinquency rate (the ratio of all accounts that are 90 or more days past due) dropping from 2.72% in Q1 2014 to 2.66% in Q1 2015. The delinquency rate was at 2.87% in Q1 2013.

Most major provinces experienced drops in their delinquency rates, led by British Columbia (down 5.15% from 2.76% in Q1 2014 to 2.61% in Q1 2015) and Ontario (down 4.80% from 2.97% in Q1 2014 to 2.83% in Q1 2015). Quebec was the only major province to experience an increase in its delinquency rate – up 5.06%. However, Quebec’s 2.17% delinquency rate is still much lower than the national average.

On a product basis, delinquencies dropped by nearly 10% in the last year for lines of credit – from 0.83% in Q1 2014 to 0.74% in Q1 2015. Lines of credit continue to be the most popular credit product, comprising 37.3% of all non-mortgage balances. Auto loan and credit card delinquency rates remained essentially flat over the last year.

90+ Day Delinquency Rates


Q1 2014

Q1 2015

Yearly PCT. Change

All Tradelines




Auto Loans




Credit Cards




Installment Loans




Lines of Credit




“It’s a positive story on the delinquency front, as Canadians continue to perform well on most of their credit accounts,” said Wang. “While installment loans have a higher delinquency rate than other credit products, the decline observed in the last year should be welcome news to many lenders in this category.”

A Closer Look at Greater Toronto Area (GTA)

This quarter, TransUnion also conducted an analysis of the Greater Toronto Area, observing balances and delinquency rates for the various sectors of this key population center. The Greater Toronto Area represents nearly 20% of the overall Canadian population.

“This analysis is significant because it finally puts numbers behind the regional differences in Canada’s largest metropolitan area, allowing Torontonians to compare themselves with their neighbours,” said Wang. “But more importantly, the analysis drives home our belief that credit health is much more than just one number. In addition to balance levels, one must take into consideration other key elements such as delinquency rates, income and debt-service ratios. The debt-service ratio is the ratio of a consumer’s after-tax income to the cost of maintaining debt and housing, whether the consumer owns a home or rents. It is a good measure of whether the consumer is indeed over-stretched. This principle goes beyond Toronto and is applicable to all Canadians.”

According to TransUnion’s analysis, Oakville appears to be performing best, with the lowest delinquency rate despite the highest average balance. “Oakville is part of the Halton region, which according to Statistics Canada has the highest average household income in the GTA,” said Wang. “Consumers in this area are able to maintain greater debt loads while consistently making more on-time payments than other neighbourhoods in the area, thereby demonstrating that delinquency rates and debt-service ratios are also key factors worth considering.”

Highest/Lowest Average Balances in Greater Toronto Area


Average Balance

90+ Delinquency Rate

Highest Balances



Oakville (Halton)



Caledon (Peel)



Vaughan (York)



Lowest Balances



Oshawa (Durham)



Brampton (Peel)






TransUnion’s analysis found that the greater Toronto area is also performing much better than the nation in terms of delinquency rates. Every sector experienced a decline in their 90+ delinquency rates between Q1 2014 and Q1 2015.

The largest delinquency improvements occurred in Whitby (down 11.5%), Markham (down 11.4%) and Richmond Hill (down 11.3%). The greater Toronto area experienced a 5.6% decline in its delinquency rate during this same timeframe. “Toronto’s economy is performing relatively well and has not seen any material negative impact from lower oil prices,” said Wang.

More information about the Q1 2015 TransUnion MarketTrends can be found here.

About TransUnion MarketTrends

TransUnion MarketTrends is an in-depth, full population-based solution that provides statistical information every quarter from TransUnion’s national consumer credit database, aggregated from virtually every active credit file on record. Each file contains hundreds of credit variables that illustrate consumer credit usage and performance. By leveraging Market Trends, institutions across a variety of industries can analyze market dynamics over an entire business cycle, helping to understand consumer behaviour over time and across different geographic locations throughout Canada. Businesses can access more details about and subscribe to MarketTrends at

About TransUnion

Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point, using historical information as well as alternative data sources. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion reaches consumers and businesses in more than 30 countries around the world on five continents. Based in Burlington, Ontario, TransUnion provides local service and support throughout Canada. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide.

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