Alberta leads country in highest average debt and delinquency rate for final quarter of 2021

Alberta is leading the country in highest average debt and delinquency rate for the fourth quarter of 2021, according to Equifax Canada.

Equifax's latest report on credit trends indicates that overall consumer debt across the country increased by 7.9 per cent from the fourth quarter of 2020 to a total of $2.2 trillion. However, the average consumer debt (excluding mortgage debts) in Canada has dropped compared with 2020. 

Despite having the highest average debt in the country at $25,172, Alberta's average consumer debt dropped by 2.64 per cent in Q4 2021 compared with the same period in 2020. The national average debt dropped only by 0.6 per cent.

Rebecca Oakes, assistant vice-president for advanced analytics with Equifax Canada, said it's a "real positive" for Alberta to see a fairly significant drop in average debt. Within the province, Fort McMurray had the highest average debt at $37,987. Calgary followed with $25,082.

When it comes to delinquency rates, Oakes said Alberta tends to be a bit more volatile than the rest of Canada due the provincial economy and changes in oil prices. Alberta's fourth quarter delinquency rate was 1.26 per cent, compared with the national average of 0.86 per cent. But it's not all bad news, according to Oakes. 

"We're still talking delinquency levels well below where we were before COVID," she said. 

The national year-over-year delinquency rate change for the fourth quarter of 2021 was down by 20.65 per cent, while Alberta's rate dropped by 14.38 per cent. Oakes said there could be several factors that led to lower delinquency rates in late 2021, including government financial supports and savings building up during the pandemic. 

Difficulty in predicting next quarter

Credit card spending was also significantly higher across the nation in the last quarter of 2021, up by 14.4 per cent compared with the same quarter in 2020. However, Oakes said Canadians were keeping up with their payments more than usual. For every dollar spent through credit, Canadians paid back 96 cents.

Oakes said it's hard to predict how delinquency rates and average debt may change in the coming months due to a number of factors, including increasing inflation, the global effects of political conflict in Europe, less government financial supports for individuals and growing interest rates.

"Unfortunately, as we look forward, it's more likely that we do start to see some consumers starting to miss more payments," she said. "The real challenge is going to be to what degree?"

This instability and uncertainty also makes it hard to predict the direction of the housing market, according to Oakes. The number of new mortgages dropped nationally by 8.1 per cent in Q4 2021 compared with Q4 2020 due to rising house prices, according to the Equifax report. 

Oakes said with the increasing cost of living — from buying groceries to gas to houses — there will be a point where the market must stabilize.

"There will be a tipping point, I think, where consumers simply won't be able to keep up with that sort of rise. So I think it will start to level off, but it's a bit hard to tell. It's a very, very changing market right now."