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Canadians were better at managing consumer debt in first quarter: TransUnion

TORONTO – Canadians with consumer debt were better at making payments on time in the first quarter of this year than they were in the same period over the previous two years, according to the TransUnion credit monitoring agency.

It says the delinquency rate on non-mortgage debt like credit cards, auto loans and lines of credit was down in the first quarter of this year, even though the average balance owing remained stable at just under $20,800.

The delinquency rate fell to 2.66 per cent in the first three months of 2015, down from 2.72 per cent a year earlier and 2.87 per cent in the first quarter of 2013.

“That, I think, is encouraging news,” says TransUnion’s director of research, Jason Wang.

He said lenders are using sound risk-management and borrowers are more aware of the need to manage credit.

“This speaks to the fact that both sides are bearing in mind the importance of responsible lending,” Wang says.

Another factor was the Bank of Canada’s decision to reduce a key interest rate in January, following the collapse of global oil prices that started in late November and continued into this year.

He says the central bank’s move reduced interest costs on some mortgages, lines of credit and other products and this enabled some people to use the savings to lower other types of debt.

Wang says that’s probably happening in Alberta, where delinquencies have improved and average balances have fallen for several quarters — probably because consumers anticipated a “localized” economic recession.

“Some of them, unfortunately, are forced to cut back already because they have lost their jobs,” Wang says.

TransUnion reported that Calgary had the highest non-mortgage debt level of six major cities, at $27,712, but that was down 2.59 per cent from a year earlier ($28,448).

Edmonton’s average debt level dropped 2.05 per cent to $23,907, pushing it from the second-highest spot to No. 3 behind Vancouver, which had a 0.56 per cent decrease to $24,019.

The three major cities that TransUnion tracked in central Canada had increased debt levels compared with last year, but remained lower than the national average: Toronto’s was up 1.17 per cent to $19,802, Ottawa’s was up 0.16 per cent to $19,476 and Montreal’s was up 0.95 per cent to $15,333.

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