Delinquency rates for credit cards and car loans rose last year, a warning sign that Canadians could start defaulting on their mortgage payments, a new report warns.
The Canada Mortgage and Housing Corporation report, released Thursday, found that mortgage debt rose by six per cent to a record $2.08 trillion in 2022.
Although that was a slower rise than the previous year, it’s still another new high at a time when Canadians are showing increasing signs of struggling to pay their debts, said the CMHC’s Tania Bourassa-Ochoa in a news release.
People will default on other debt before they default on their mortgages, Bourassa-Ochoa explained. Mortgages could be next.
“Although mortgages in arrears remain low, they are a lagged indicator,” said Bourassa-Ochoa. “In challenging financial situations, consumers will typically be delinquent on credit cards, lines of credit or auto loans before mortgages. Increasing delinquencies for these credit products indicate a larger number of consumers are having difficulties with their debt payments.”
The report found that delinquencies on auto loans rose to pre-pandemic levels, of roughly two per cent, while roughly 1.5 per cent of credit cards were delinquent.
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