An alarming trend continues to play out among Canada’s seniors—the most vulnerable group of borrowers is struggling to pay back their debt.
The delinquency rate (being 90 days past the due date) among those aged 65 and older is up 7.13 per cent year-over-year, according to new data from credit monitoring agency Equifax. That is the highest rate across all age groups.
Those aged 56 to 65 had the second-highest increase in delinquency rates, up 6.71 per cent.
“Seniors continued to be challenged in Q2, with delinquencies and bankruptcies rising further,” Bill Johnston, VP of data & analytics at Equifax Canada, told Yahoo Finance Canada.
“Delinquency rates for seniors have risen for five straight quarters.”
Johnston says the string of interest rate hikes by the Bank of Canada is having a lingering effect.
“The previous increases in interest rates have impacted seniors more significantly given their higher use of variable rate lines of credit,” said Johnston.
“As interest rates rose, those consumers with large lines of credit balances, particularly seniors, have faced larger monthly payments and tighter cash flows.”
Overall, delinquencies were up across the board. However, Canadians now seem to be doing a better job of keeping their debt under control, compared to earlier in the year.
Equifax says total debt per consumer rose by 1.9 per cent to $71,970 in the second quarter, following 2.6 per cent growth in the first quarter.
Another encouraging sign is that non-mortgage debt rose by 2 per cent in the second quarter, compared to 3 per cent in the first quarter.
“It looks like, after turning to credit to clear their winter blues, consumers were able to get back on a more reasonable track through the spring,” said Johnston.
“There were some troubling signs in the first quarter, with credit card usage and average debt rising sharply for some vulnerable consumer groups. The results in the last quarter are much more aligned to the current economic situation.”
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.