Province still best in debt loads

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This article was published 08/12/2016 (2296 days ago), so information in it may no longer be current.

MANITOBANS still boast the lowest average debt loads in the country, although debt-delinquency rates continue to climb, the latest quarterly report on consumer credit trends from Equifax Canada states.

The credit-monitoring agency said Manitobans were carrying an average debt load (excluding mortgages) of $18,355 in the third quarter of 2016. That’s nearly $4,000 lower than the national average of $22,081 and nearly $10,000 less than the Alberta average, which remains the highest in the country at $27,956.

But it’s also 3.1 per cent higher than it was a year earlier, the agency’s data show.

‘Creating a budget is the first step, but sticking to it is probably the hardest part’ — Equifax’s Regina Malina

Regina Malina, Equifax Canada’s senior director of decision insights, said there’s more good news than bad in the latest Manitoba numbers.

“Not only is the debt the lowest, but it’s increasing at a rate that is below the national average, which is also great,” she said, adding the national average increase in debt from the third quarter of last year to the third quarter of this year was 3.6 per cent.

The other encouraging news is although the debt-delinquency rate in Manitoba has risen to 1.25 per cent from 1.05 per cent, it’s still the fourth-lowest rate among the provinces and the second-lowest among the four western provinces, Malina said.

“The only part to be cautious of is that it has been rising in Manitoba for the last six quarters,” she added. “So it’s a little bit of a concern because it seems to be a consistent increase. But from the perspective of the actual level of delinquency, I think it’s still a fairly low number.”

Malina said she suspects a higher Manitoba unemployment rate — it went from 5.3 per cent in the third quarter of last year to 6.4 per cent in Q3 of this year — may be one of the main reasons for the higher delinquency rate.

“The unemployment rate is certainly the first red flag we see before we see delinquency rates get impacted.”

Nova Scotia and New Brunswick had the highest delinquency rates, both at 1.70 per cent, and British Columbia had the lowest at 0.95 per cent. The national average was 1.14 per cent, up from 1.05 per cent in Q3 2015.

Malina said on average, Canadians across the country are managing their debt wisely, with the majority paying off their credit cards in full every month and few making only the minimum payments.

She said a recent national survey also showed two-thirds of Canadians say they’ve draw up a budget for how much they plan to spend this Christmas, which is also encouraging.

“The only advice I would give on top of that is to stick to your budget. Creating a budget is the first step, but sticking to it is probably the hardest part.”

She also noted most Canadians are decreasing their debt, but those who are still increasing it are adding larger amounts on average, which is driving up total debt levels.

“The fact is, people who can afford to do so are buying more cars, spending more on housing and borrowing more from financial institutions. Meanwhile, older Canadians showed the largest increase in average debt but continue to have the least trouble making their required payments on time.”

The agency’s data show delinquency rates were lower among Canadians 56 years of age and older than among younger age groups. Malina said that’s likely the case in Manitoba, as well.

“The numbers may not be exactly the same… but I think it’s more of a common trend across all regions,” she added.

murray.mcneill@freepress.mb.ca