There are troubling new numbers that show more Canadians are missing payments on their mortgages, auto loans, and credit cards.
A new report from Equifax Canada blames economic uncertainty, rising unemployment and the high cost of food and housing.
Young consumers missing payments
According to Equifax’s Consumer Trends and Insights, 1.4 million consumers missed a credit payment in the first quarter of this year. That’s an increase of 146,000 from last year.
“It’s younger consumers and lower income consumers where we are seeing missed payments really rising,” said Rebecca Oakes, vice president of advanced analytics at Equifax Canada.
More consumers are also having trouble paying their car loans, especially younger people. The report found that missed auto loan payments with consumers 35 and under increased 30 per cent over the year before.
“It’s not a great situation that we are in right now,” said Oakes.
Canadians are also under mortgage stress, and many are searching for ways to lower their payments.
Equifax found that 28 per cent of homeowners switched lenders after shopping around for better interest rates, with 46 per cent moving between the “Big Five” banks, reflecting the intense competition among major lenders.
“On the mortgage side, we have seen missed payments, especially in Ontario. [They] are so much higher than they were just 12, 24 and 36 months ago,” said Oakes.
Home prices outpacing disposable income
Home ownership also remains out of reach for many people. A new report from Desjardins found that while over the past 25 years home prices have risen 320 per cent, the average disposable income only increased 110 percent.
Credit counselling services say anyone who is missing payments should seek help before their situation gets worse.
“If you’re missing payments, you may be cutting costs to pay for things and you’re missing out on things that are necessities,” said Mason Cox, with the Credit Counselling Society. “You may be getting collection calls, legal notices, and you’re not really sure who to turn to.”
Missing any type of payment can affect your credit rating and score, which can cause higher interest rates and reluctancy from lenders in the future.
One bright spot in the Equifax report says that credit card spending has dropped to a three-year low. As more people face financial pressures, it’s believed some are trying to keep tighter control over their finances to avoid running up credit card bills.
