Popularity of variable-rate mortgages plummets to pre-pandemic levels + MORE Jun 21st

As the country re-opens after COVID-related restrictions, Canadians are faced with a worrying financial picture. Many have moved, others are looking to travel, and the cost of living is ballooning with unusual rates of inflation. Meanwhile, the Bank of Canada (BoC) rate hikes designed to curb these forces are adding pressure to those with variable-rate loans and mortgages. Unsurprisingly, many Canadians are using their credit cards to charge their expenses.

How much debt does the average Canadian carry? 

The average credit card balance for Canadians in the first quarter of 2023 was $3,909, according to Transunion. And that is up from average monthly credit card spend of almost $2,447 in the third quarter of 2022, which is above the 17.3% from same time in 2021 and up 21.8% in 2019, according to Equifax. And from another report from the Canadian credit bureau, Canadian consumer debt has risen to $2.32 trillion, with an average debt load of approximately $21,183—excluding mortgages…

When Jeremy Hamelin was about to enter the mortgage industry four years ago, he admits he had some preconceived notions about how he may—or may not—be accepted by colleagues and clients.

Mortgage interest costs have undergone a “dramatic” surge over the past year, having risen by nearly 70%, according to Statistics Canada.

Debt seems to be a normal thing for Canadians these days. After a brief decline during the pandemic, the Canadian household debt-to-income ratio soared to 184.5% in the first quarter of 2023. That means Canadians owe nearly $1.85 for every dollar of disposable income.

The ballooning debt has been mainly driven by rising mortgage balances as demand pushed home prices to record levels across the country.

Does this mean the average Canadian is up to their eyeballs in debt? Not necessarily.

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What is the average debt for Canadians?

Let’s start by looking at the average consumer balance held across different credit products. This information comes from TransUnion’s Q1 2023 Credit Industry Insights report.

Debt typeAverage owedCredit cards$3,909Installment loans$20,845Auto loans$26,494Lines of credit$34,328Mortgages$349,178

Note, the numbers here represent the average consumer that carries a balance in these categories…

The popularity of variable-rate mortgages is continuing to fall and is now nearly at levels last seen prior to the pandemic in early 2020.