The hangover from Canada’s decades-long debt party is starting to hit — and it’s a rough one.
What happened: Canadians are struggling to pay off everything from credit cards to mortgages, with severe delinquency rates now hitting levels not seen since the aftermath of the 2008 financial crisis, according to new data from Equifax Canada.
- In the first three months of the year, over 1.4 million Canadians, or about one in 22, missed a credit payment.
- Canada’s severe delinquency rate — the portion of debt where payments are more than 90 days late — climbed to its highest rate since 2010 for non-mortgage debt.
Zoom in: The picture for mortgages isn’t any prettier, particularly in Ontario. Mortgage delinquencies in the province rose 71.5% year over year, while the share of Ontarians who missed a mortgage payment in the first quarter was the highest ever recorded by Equifax.
Why it matters: Borrowing can help fuel growth, but when the economy takes a turn, too much debt becomes a burden. With the job market and wage growth both cooling, heavily indebted households are now struggling to keep up with their bills.
Big picture: Canada topped the G7 in household debt in 2023, and total borrowing levels surpassed the country’s GDP. That was manageable during years of low interest rates and stronger job markets, but now it could be coming back to bite us.—LA