1.4 Million consumers missed a credit payment while spending dips to 3-year low

Economic uncertainty continued to impact credit usage and consumer financial health across Canada during the first quarter of 2025 according to Equifax Canada’s latest Market Pulse Consumer Credit Trends and Insights.

Total consumer debt was $2.55T at the end of Q1, up four per cent year-over-year, but down more than $6B from the end of 2024, reflecting a modest quarterly decline amid long-term growth.  Average non-mortgage debt per consumer rose to $21,859 in Q1 2025, primarily driven by a strong auto loan market as buyers looked to lock in purchases before anticipated price hikes, said the report.

“We often observe seasonal changes in credit usage during the first quarter. Generally speaking in the spring, we tend to see mortgage debt rising, however for Q1 2025 we saw mortgage debt levels fall compared to last quarter,” said Rebecca Oakes, Vice President of Advanced Analytics at Equifax Canada.“ Despite a slowdown in demand for non-mortgage debt, overall balances remained fairly flat, an indication that consumer payment levels may be falling.”

Card spending slows but balances continue to rise 

After experiencing high numbers for new credit card openings in 2023 and 2024, the first quarter of 2025 saw a 10.3% decline in new card originations. Consumers that have lower credit scores accounted for an increase in new card openings, potentially indicating heightened credit reliance and financial strain in this consumer group, explained the report.

Average monthly credit card spen per card holder fell by $107 dollars during Q1, dropping to the lowest level since March 2022. Ontario, British Columbia, Prince Edward Island, Nova Scotia and Yukon saw the biggest pull back in spending, dropping between six and seven per cent compared to the prior year, it said.

“A drop in credit card spending when combined with increased payment amounts can imply improving financial conditions of consumers”, said Oakes. “Our data shows card payment levels, especially for younger consumers, are starting to fall, indicating this spending slowdown is likely driven more by consumers trying to be prudent rather than switching from credit to debit for financing.”

The average credit card pay rat decreased to 52.9% in Q1, down 32 basis points.  Notably, younger consumers (under 35 years old) showed a more dramatic shift, with their average pay rate falling 392 basis points from 62.9% to 58.9%. This same group also exhibited the greatest increase in the level of minimum payers, rising 25 basis points year-over-year, noted Equifax.

Mortgage growth driven primarily by renewals and refinancing  

The report said new mortgage originations jumped 57.7 per cent year-over-year in Q1 2025, but much of this activity stemmed from renewals and refinancing. This reflects the onset of the so-called “Great Renewal,” as a wave of pandemic-era mortgages come up for renewal.

“The shift in the mortgage market is clear – this is currently about existing homeowners navigating a complex refinancing environment,” added Oakes. “But even as some find relief, affordability challenges haven’t eased for everyone.”

First-time homebuyers returned to the market, with activity up 40%  from Q1 2024. Affordability remained a hurdle and while average monthly payments dropped by 7.8% to $2,300, the average loan size increased by 7.5% year-over-year.

Debt divide deepens as missed payments rise for some 

“While some consumers showed signs of prudence in their spending choices during the first quarter, missed payments continued to rise across most credit products. In total, more than 1.4 million consumers (1 in 22) missed at least one credit payment during the quarter,” said Equifax.

“Although mortgage holders experienced some stabilization thanks to steady interest rates, financial strain remained acute for non-mortgage consumers. Consumer level delinquency rates among non-mortgage holders rose 8.9% year-over-year, compared to 6.5% for mortgage holders. Younger Canadians were hit hardest, with the 18–25 age group experiencing a 15.1 per cent increase in delinquency rates.

Significant increases for younger consumers and auto loans 

The highest credit card 90+ day delinquency rates were observed among younger consumers under the age of 26, at 5.38%, a significant 21.7% increase year-over-year for this group. Overall, this rate stood at 3.76%, marking a 15.8% increase, revealed Equifax.

Auto loans followed a similar trend, with the delinquency rate for younger consumers rising by 30% to 1.95%, compared to an overall rate of 1.08%, which represented a 15.3% increase.

“We’re observing positive shifts in consumer behaviour, with reduced credit card usage and early signs of delinquency stabilization for some consumers. However, headwinds will likely persist, such as rising unemployment and rising food prices, in already strained regions,” concluded Oakes.

Age Group Analysis – Debt & Delinquency Rates (excluding mortgages)  

Major City Analysis – Debt & Delinquency Rates (excluding mortgages) 

Province Analysis – Debt & Delinquency Rates (excluding mortgages)

* Based on Equifax data for Q1 2025

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