Canadian Consumer Credit Market Shows Signs of Recovery Amidst Regional Disparities in Debt Levels and Delinquency Trends

Canadian consumer credit balances reached $2.52 trillion in Q2 2025, up 4.4% YoY, driven by inflation. Non-mortgage debt declined by 10%, while subprime consumers saw their inflation-adjusted average balances grow by 15%. Regional disparities in cost of living and wage growth contributed to varying delinquency trends across provinces. Alberta saw the highest level of serious delinquency, rising 11 basis points to 2.29%.

Canadian consumer credit balances reached $2.52 trillion in Q2 2025, up 4.4% year-over-year (YoY), according to the latest TransUnion report. This growth, driven by inflation, highlights the ongoing financial stress faced by Canadian households [1].

Non-mortgage debt declined by 10% over the same period, indicating that rising mortgage costs are taking up more financial space in household budgets. However, subprime consumers, who are more likely to feel the impact of higher costs of living, saw their inflation-adjusted average balances grow by 15% [1].

Regional disparities in cost of living and wage growth contributed to varying delinquency trends across provinces. Alberta saw the highest level of serious delinquency, rising 11 basis points to 2.29%, while Quebec remained the least delinquent province overall [1].

Despite these challenges, the Canadian housing market is showing early signs of a rebound, driven by lower interest rates and renewed demand from buyers who were previously priced out of the market. Mortgage originations surged 51% YoY in Q1 2025, reaching $82.6 billion in new volume [1].

The average new mortgage loan amount rose 6.9% YoY to $368,432, underscoring the ongoing affordability challenges facing homebuyers. Both Ontario and British Columbia saw average new mortgage loan sizes above the national average, driven largely by persistently high prices in Toronto and Vancouver [1].

The Consumer Credit Industry Index (CII) declined by 1.4 points from the previous quarter to 98.8 in Q2 2025, reflecting softening consumer spending amid rising cost-of-living pressures and subdued credit demand [1].

References:
[1] https://www.globenewswire.com/news-release/2025/08/13/3132373/0/en/Canadian-Credit-Market-Shows-Signs-of-Recovery-as-New-Mortgages-Rise-51-Year-Over-Year.html