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Canadians still adding to debt but fewer falling behind, report says

Credit cards are displayed in Montreal on December 12, 2012.

Ryan Remiorz/THE CANADIAN PRESS

Canadians continue to add to their debt burden but delinquency rates are falling, according to a new report.

Total consumer debt balances – excluding mortgages – rose 3.7 per cent year-over-year in the third quarter, says the study by Equifax Canada.

At the same time, the percentage of non-mortgage loans that were past due by 90 or more days fell to 1.13 per cent in the third quarter, a new record low, Equifax Canada said on Monday.

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The 90-day plus national mortgage delinquency rate is stable and trending "slightly downwards," it said.

The sector that saw the fastest growth in the third quarter was automobiles, with a 7.9 per cent year-over-year increase.

Credit card balances posted the slowest growth at 2.6 per cent, according to the analysis.

"Canadian vehicle sales continue to gain momentum, reflecting improving vehicle affordability and very attractive incentives," said Regina Malina, director of modeling and analytics at Equifax Canada.

"While this sector is very active, there is a need to continue monitoring its performance given possible changes to the current financial environment, including auto incentives and rate increases."

The consumer age group that its taking on debt at the quickest rate is the 65-and-over segment, but seniors are maintaining healthy payment trends, said Equifax Canada.

"Credit trends among consumers remain strong as household consumption continues to support economic growth," said Cristian deRitis, senior director of consumer credit economics at Moody's Analytics.

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"With interest rates expected to remain low throughout 2014 due to slow growth in the United States and Europe, performance should remain favourable.

"Longer term risks to the outlook include a sharp rise in interest rates leading to significant payment shocks, especially for mortgages. A slowdown in export growth could also make it difficult for consumers to pay their bills, particularly in the West."

Data for the report were taken from Toronto-based Equifax Canada's data base, which stores the majority of credit transactions across Canada. There are over 24 million unique consumer files, the company said. Transaction volumes for data are estimated at 105 million per month.

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About the Author
Quebec Business Correspondent

Bertrand has been covering Quebec business and finance since 2000. Before joining The Globe and Mail in 2000, he was the Toronto-based national business correspondent for Southam News. He has a B.A. from McGill University and a Bachelor of Applied Arts from Ryerson. More

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