Delinquency Rates – Runaway Train

Although increasing debt levels may be slowing in the areas most impacted by the oil-slump (our backyard) it is clear that a substantial increase in delinquency rates in this same region is a cause for concern.

As a collection agency with offices in Edmonton, Calgary and the GTA we are watching with keen interest the unfolding of events with respect to these phenomenon and their impact (or lack thereof) on Canadian credit markets.

Based on the global economic macro-view one can expect this trend to continue for some time to come making it that much more important for our clients to apply greater vigilance in both their credit granting processes as well as accounts receivable follow up including, more timely escalation to third party collections.

TransUnion’s latest Canada Industry Insights Report found that the average Canadian’s non-mortgage debt level rose to $21,348 in Q1 2016, up 2.7% from Q1 2015. The increase was particularly visible outside of the oil patch, with Ontario and Quebec seeing the greatest rises.

A couple of the key take away points of interest we found in the report

• Fueling the increase could be found in the sub-prime borrowers segment with a growth rate of 5.7% year over year while prime, and prime plus borrowers have at the same time pulled back in the borrowing binge as evidenced in the following chart:

Average Credit Card Balance per Consumer for Each Risk Tear

• Not surprisingly there are clear cut differences regionally on the delinquency front (accounts 90 days or more past due) with regions most directly impacted by the oil slump leading the charge as indicated in the chart below:

90+ Day Delinquency Rates for All Non-Mortgage Loans