Households are increasingly turning to personal loans and tempering their use of credit cards, according to Statistics Canada.
The national statistical agency reported that total household borrowing rose by 0.2% in May, pushing total credit liabilities to $2.86 trillion and marking the third straight month of 0.2% growth in household debt.
Mortgage debt rose by 0.2% in the month, but StatsCan noted that the annualized growth rate of 2.0% represents the slowest pace since the end of 2011.
At the same time, non-mortgage debt was up by 0.4% in May, and expanded at more than twice the rate of mortgage debt on an annualized basis, rising 4.6%.
However, the composition of that borrowing shifted away from credit cards and toward personal borrowing, StatsCan reported.
Credit card debt increased by 1.1% in May, down from 1.5% the previous month.
Meanwhile, personal loan plans and other personal loans rose by 0.7% and 0.8%, respectively, up from 0.4% and -0.4% in the previous month, StatsCan reported.
“With the policy interest rate reaching 5.0% in July 2023 […] some households may face additional financial pressures as they continue to access credit to fund their spending, especially for more vulnerable groups,” StatsCan noted.
The agency added that annual growth in non-mortgage debt in the first quarter has been strongest for the poorest 40% of households, and younger households (those headed by people aged 35 to 44 years).