Real Estate Growth and Auto Loans Raise Demand for Credit in Q3: Equifax – Business News

Photo: The Canadian Press

The Equifax letter header is shown in this undated image. THE CANADIAN PRESS / Christopher Katsarov

Consumer credit demand intensified in the third quarter, driven primarily by increases in mortgage balances and new auto loans, according to data released Monday by credit reporting agency Equifax.

According to Equifax, mortgage balances and new car loans increased 6.6% and 11.7% year-over-year, respectively. The overall average consumer debt increased 3.3 percent from the third quarter of last year.

Rebecca Oakes, assistant vice president of advanced analytics at Equifax Canada, said in an interview that mortgage growth in the last quarter was particularly strong, with the largest increase among people under 35. This trend also comes as an economic fallout from the pandemic and the associated blockade as the measures hit young people particularly hard.

“In terms of new mortgages, it could be refinancing, or it could be brand new, first-time homebuyers, or it could be people moving houses,” Oakes said. “This was actually the highest value we’ve ever seen.”

The surge in demand for auto loans in the third quarter may have been the result of pent-up demand from people who had to wait to buy cars later in the year, Oakes said.

The data in the Equifax report is taken from banks and other credit institutions that provide data to the credit rating agency.

Equifax set total consumer debt at $ 2.04 trillion, while Statistics Canada reported in June that household debt had reached $ 2.3 trillion, with $ 1.77 of debt for every dollar of household disposable income. .

According to Equifax, more than three million consumers have chosen to use deferred payment programs since the start of the COVID-19 pandemic. Since the beginning of this year, some banks have offered consumers the option to suspend loan payments for several months, in recognition of the financial strain the pandemic has created for many families.

However, under the deferred payment programs, interest continues to accrue during the months for which payments are suspended.

The percentage of balances where credit users missed three or more payments was at its lowest since 2014, with deferral programs likely masking real default rates, according to Oakes.