Canada’s household debt situation improved a bit in the first quarter of 2018 (Q1), suggests a new report from Toronto-based rating agency DBRS Ltd.
Household debt growth slowed in Q1, and that outstanding consumer credit declined by 0.5% during the period.
“There was a noticeable reduction in growth of household indebtedness during the first quarter of the year, as stricter mortgage rules that came into effect on Jan. 1, 2018 and higher interest rates appeared to have slowed household borrowings,” the report states.
Home equity lines of credit (HELOCs) totalled $231.5 billion at the end of Q1, according to the Office of the Superintendent of Financial Institutions, representing approximately 46.0% of consumer credit.
“Property value appreciation and the relatively easy-to-access, low-borrowing cost option continues to play a key role in driving the growth,” the report states. However, the loss rates for HELOCs remain low, ranging between 0.0% and 0.02% annualized.
Additionally, credit card loans as a proportion of total consumer credit is decreasing. Credit cards account for 16.6% of total consumer credit as of March 31, and that these loans “continue to perform well, with losses remaining low across all issuers at 2.98%” in the first quarter, the report states.