Canada’s rising debt crisis and record delinquency rates

Sharp increases in delinquency highlights financial vulnerabilities across Canada

Over the past year, average debt levels have grown modestly, reflecting increased reliance on credit to meet basic living costs. Delinquency rates—an indicator of financial distress—have surged dramatically, signaling a growing inability among many to manage their financial obligations. This study analyzes key trends shaping the financial landscape of Canada, offering a comprehensive analysis of how debt and delinquency vary across provinces, cities, and generations. It also explores Canadians’ shifting behaviors through Google search trends, highlighting the rising demand for financial solutions as economic uncertainties persist.

Key findings:

1. Delinquency rates outpace debt growth nationwide

• Average non-mortgage debt increased modestly by 3.79% YoY, reaching $21,810.
• Delinquency rates surged by 19.14% YoY, rising to 1.43%, highlighting the growing inability of Canadians to manage their financial obligations

2. Google Search trends reflect Canadians' financial stress

• Proactive financial management tools are gaining traction, with searches for “budget planner” soaring by 152.86% YoY, while “budget app” searches declined by 24.32% YoY.
• Interest in high-interest borrowing solutions like “payday loans” increased by 27.6% YoY, underscoring short-term financial pressures.

3. Regional disparities reveal financial hotspots

• Newfoundland experienced the highest increase in debt (+7.78%), yet delinquency rates remained stable (-0.46%), demonstrating resilience.
• Quebec’s delinquency rates rose by 24.16%, the sharpest increase nationwide, signaling heightened financial distress.
• Prince Edward Island saw a 5.47% increase in debt, reflecting growing financial burdens in smaller provinces.

4. Urban centres under pressure

• Toronto and Vancouver, burdened by high housing costs, saw delinquency rates rise by 24.16% and 19.00%, respectively.
• Smaller cities like Halifax and St. John’s demonstrated relative stability, with modest debt growth and minimal delinquency increases.

5. Generational trends show financial vulnerabilities across life stages

• Young adults (18–25) faced a 17.02% rise in delinquency rates, driven by limited financial experience and precarious incomes.
• Canadians nearing retirement (56–65) saw the largest debt increase (+6.28%) and a 16.88% rise in delinquency rates, reflecting financial strain in pre-retirement years.
• Retirees (65+) maintained the lowest average debt ($14,575), but rising healthcare and living costs contributed to a 8.12% increase in delinquency rates.

Overview: Rising debt and delinquency across Canada

Canadian households are grappling with rising debt and escalating delinquency rates, painting a concerning picture of financial instability. Between Q3 2023 and Q3 2024, while average debt levels increased modestly, delinquency rates surged at a much higher pace. These trends underscore the mounting economic pressures affecting Canadians nationwide.

Debt growth reflects economic strain

The average non-mortgage debt per Canadian consumer grew by 3.79%, reaching $21,810 in Q3 2024. This steady rise reflects Canadians’ increasing reliance on credit to navigate rising living costs, driven by inflation and stagnant wage growth.

This modest increase in borrowing is outpaced by rising delinquency rates, suggesting that more Canadians are struggling to meet their financial obligations even as they rely more heavily on credit.

Delinquency rates signal financial vulnerability

Delinquency rates surged by 19.14% YoY, climbing from 1.20% in Q3 2023 to 1.43% in Q3 2024. This sharp rise reflects the growing number of Canadians defaulting on debt payments, a trend exacerbated by high interest rates and persistent economic pressures.

The disconnect between slower debt growth and sharply increasing delinquencies underscores a critical issue: many Canadians are reaching the limits of their financial resilience.

Economic and behavioral context

Economic conditions and shifting consumer behaviors provide key context for these findings:

• Inflation and rising costs: Persistent inflation continues to drive up the cost of essential goods and services, stretching household budgets and increasing reliance on credit.
• Stagnant wages: Wage growth has not kept pace with inflation, leaving many Canadians unable to adjust to rising costs.
• Short-term solutions with long-term risks: Canadians are turning to credit as a temporary solution to financial strain, but rising delinquency rates suggest this approach is proving unsustainable for many.

Key takeaways:

1. 1 Delinquency outpaces debt growth: The contrast between modest debt increases and sharp delinquency spikes highlights growing financial instability, suggesting more Canadians are struggling to manage existing debt burdens.
2. 2 Inflation drives vulnerability: Rising living costs, coupled with stagnant wage growth, are amplifying household financial pressures, pushing more Canadians toward credit reliance and default risk.
3. 3 Urgent need for intervention: Policymakers, financial institutions, and advocacy groups must collaborate to address rising delinquency rates by expanding access to debt relief programs, financial education, and economic support.

Growing financial stress reflected in search behaviour

As financial pressures mount, Canadians are turning to search engines to seek solutions for their growing economic struggles. Google Trends data from Q3 2023 to Q3 2024 highlights shifts in search behavior, reflecting the diverse ways Canadians are attempting to navigate their financial challenges. From severe financial crises to proactive debt management strategies, the data reveals how digital behavior mirrors real-world anxieties.

Severe financial stress: Crisis management takes centre stage

Searches for terms associated with severe financial distress showed the most striking increases, indicating that more Canadians are exploring last-resort measures.

Key observations include:

• Personal bankruptcy: Search interest surged by 4% quarter-over-quarter (QoQ) in Q3 2024, suggesting a sharp rise in Canadians considering bankruptcy as a way to manage unmanageable debt. Despite this, its 34.0% year-over-year (YoY) decline points to earlier spikes in interest during 2023.
• Garnishment: Related to wage or asset seizure for unpaid debts, searches for this term rose by 6% YoY, reflecting the increasing legal and financial pressures on Canadian households.
• Bankruptcy: General searches for "bankruptcy" grew modestly by 4.6% YoY, reinforcing the steady upward trend in financial distress across the population.

High financial stress: Canadians seek debt relief

Searches related to high-stress financial terms reveal that Canadians are actively seeking ways to reduce or restructure their debt. These terms show the urgency with which individuals are attempting to regain financial stability:

• Payday loan: With a 6% YoY increase, searches for payday loans highlight a growing reliance on high-interest, short-term borrowing, often used as a last resort for immediate expenses.
• Consumer proposal: Up by 3% YoY, this search term reflects an increased interest in alternatives to bankruptcy, such as negotiated repayment agreements with creditors.
• Debt relief: Despite a slight quarterly decline, searches for "debt relief" grew by 5% YoY, showing a sustained demand for strategies to alleviate financial burdens.

Moderate financial stress: Exploring proactive solutions

On a more optimistic note, Canadians are increasingly seeking proactive strategies to manage debt and improve financial literacy. The data reflects a growing interest in tools that promote long-term financial health:

• Debt consolidation: Searches rose by 8% YoY, indicating Canadians’ preference for simplifying multiple debts into a single payment.
• Budget app: With a 3% YoY rise in the use of budget apps, this term points to the growing adoption of digital tools for tracking spending and planning finances. 
• Budget planner: Leading the trend, searches for budget planners saw a 9% YoY increase, signaling Canadians’ heightened focus on personal budgeting as a preventative measure against financial crises.

Key takeaways:

1. 1 Severe financial stress drives urgency: Searches for "personal bankruptcy" and "garnishment" reflect the growing number of Canadians facing severe financial challenges.
2. 2 Debt relief in high demand: The increasing interest in debt relief strategies, such as consumer proposals, shows Canadians’ desire for manageable repayment solutions.
3. 3 Budgeting tools on the rise: The sharp rise in searches for budget planners and apps demonstrates Canadians’ proactive efforts to regain control of their finances before reaching crisis points.

This section provides a digital snapshot of Canadians’ financial concerns, highlighting the growing reliance on online tools and resources to address both immediate and long-term economic challenges. Let me know if further refinements are needed!

Debt and delinquency: Trends across Canada's provinces

Across Canada, debt and delinquency trends reveal significant regional disparities, shaped by economic conditions unique to each province. While some regions have managed to stabilize delinquency rates despite rising debt, others face sharper increases, underscoring the diverse financial realities Canadians are experiencing.

Provincial highlights

Ontario: Financial pressures mount

Ontario’s average debt increased by 4.38%, reaching $22,423 by Q3 2024, while delinquency rates surged by 23.78%, rising to 1.50%. The sharp increase in delinquencies reflects growing financial strain in urban centers like Toronto, where housing affordability issues and high costs of living dominate. Ontario’s challenges underscore the need for targeted financial interventions to support residents.

Quebec: Alarming delinquency growth

While Quebec’s debt rose by a modest 2.68%, reaching $19,027, the province experienced the largest YoY increase in delinquency rates, surging by 24.16% to 1.04%. These figures highlight growing repayment challenges for Quebecers, particularly among lower-income households. Rising living costs and limited financial flexibility are key contributors to the province's worsening financial situation.

Nova Scotia: Stability amid growth

Nova Scotia’s average debt grew by 3.85%, reaching $21,323, while delinquency rates rose modestly by 6.65%. Compared to other provinces, Nova Scotia demonstrates relative stability, with residents managing rising debts without significant increases in delinquency. This suggests that local economic conditions or financial support systems are helping mitigate financial stress.

New Brunswick: A model of resilience

New Brunswick’s debt rose by 3.24%, reaching $21,491, while delinquency rates remained steady at 1.53%, increasing by just 0.42%. The province’s ability to stabilize delinquency rates despite rising debt reflects careful financial management among residents and possibly stronger access to financial education or support resources.

Prince Edward Island: Rising financial burdens

In Prince Edward Island, debt levels increased by 5.47%, reaching $23,464, while delinquency rates rose by 5.94%, remaining below the national average. This trend suggests that while borrowing is rising, residents are maintaining reasonable repayment behavior. PEI’s story highlights a cautious optimism amid growing financial pressures.

Newfoundland: Debt growth balanced by stability

Newfoundland experienced the highest debt growth among provinces, with a 7.78% increase to $24,771. Delinquency rates decreased slightly by 0.46%, indicating that residents are managing higher debt loads effectively. This unique trend may reflect local economic factors, such as stable incomes from specific industries or government initiatives supporting repayment.

Alberta: Rising delinquencies in a high-debt province

Alberta’s average debt rose modestly by 1.44%, reaching $24,555, the highest in Canada. Delinquency rates surged by 17.39%, reflecting growing financial strain. Economic challenges, such as volatility in the energy sector, likely play a significant role in the province’s financial struggles, impacting household income stability.

Manitoba: Steady growth, rising challenges

Manitoba’s average debt grew by 4.45%, reaching $18,086, while delinquency rates climbed by 11.69%. This combination of debt and delinquency growth suggests rising financial pressures for Manitobans, particularly in balancing debt repayment with everyday expenses.

Saskatchewan: Debt management under pressure

Saskatchewan saw a 5.92% increase in average debt, reaching $23,405, while delinquency rates rose by 12.44%. The province faces growing financial pressures, with its delinquency rate increase pointing to challenges in managing rising debt levels. This trend underscores the need for targeted financial education or debt management programs.

British Columbia: Urban financial strain

British Columbia’s average debt grew by 4.26%, reaching $22,438, while delinquency rates increased by 15.33%. With high housing costs in cities like Vancouver, many residents are facing mounting financial pressures. Rising delinquency rates point to the growing difficulty of managing debt in an environment of persistent affordability challenges.

Key takeaways:

1. 1 Debt and delinquency patterns vary widely: Newfoundland stands out for effectively managing high debt growth, while Quebec and Ontario struggle with escalating delinquency rates.
2. 2 Urban vs. regional differences: Urban provinces like Ontario and British Columbia face unique challenges tied to high living costs, while smaller provinces demonstrate more financial resilience.
3. 3 Policy interventions needed: Regional economic policies must address unique provincial challenges, from housing affordability in British Columbia to repayment assistance programs in high-debt provinces like Alberta and Newfoundland.

Debt and delinquency trends across Canadian cities

Examining debt and delinquency rates at the city level reveals significant financial disparities across urban centers in Canada. From the resource-dependent economy of Fort McMurray to the high cost-of-living pressures in Toronto and Vancouver, this city-level analysis uncovers how local economic conditions shape household financial health.

City highlights

Calgary: Rising delinquency amid steady growth

Calgary’s average debt grew by a modest 0.77% to $23,999, but delinquency rates surged by 17.23%, reaching 1.59%. These trends suggest that while borrowing has stabilized, financial strain among middle-income households is increasing. Calgary’s economy, tied closely to Alberta’s resource sector, may be facing ripple effects from broader economic volatility.

Edmonton: High density growth

In Edmonton, debt levels rose by 0.71%, reaching $23,744, while delinquency rates jumped significantly by 18.88%, hitting 2.04%. This sharp rise indicates a growing number of residents are struggling with repayment. Edmonton’s trend mirrors Alberta’s overall financial pressures, where income volatility impacts financial stability.

Halifax: Stability amid moderate debt growth

Halifax’s debt rose by 2.37%, reaching $21,265, with a modest delinquency rate increase of 11.60%. These figures suggest that Halifax residents are navigating financial challenges more effectively than in other urban centers. The city’s economic diversification and moderate cost of living may be contributing to this relative stability.

Montreal: Alarming delinquency spike

Montreal saw average debt rise by 2.98% to $16,894, while delinquency rates soared by 27.06%, the largest increase among major Canadian cities. These numbers reflect significant financial strain in the city, where many households face rising costs but limited wage growth. Montreal’s sharp delinquency rise may indicate systemic challenges that need urgent attention.

Ottawa: Steady growth with rising strain

Ottawa’s debt increased by 2.76%, reaching $19,570, while delinquency rates climbed by 19.29%. As Canada’s capital city, Ottawa’s financial trends likely reflect broader national pressures, including rising living costs and economic uncertainty. The notable delinquency rate growth suggests that even households with traditionally stable incomes are beginning to feel the strain.

Toronto: Housing pressures drive financial instability

In Toronto, debt rose by 4.66% to $20,872, while delinquency rates surged by 24.16%, reaching 1.90%. As Canada’s largest city, Toronto’s challenges are closely tied to its unaffordable housing market and high living costs. The significant increase in delinquency rates underscores the financial toll these pressures are placing on residents.

Vancouver: High debt and rising delinquencies

Vancouver’s debt increased by 4.53%, reaching $23,002, while delinquency rates grew by 19.00%. These trends highlight the mounting financial pressure in one of Canada’s most expensive cities. Rising costs of living and housing affordability challenges are likely driving this sharp rise in delinquency.

St. John’s: Stability amid modest debt growth

St. John’s experienced a 2.41% debt increase, reaching $23,938, with a nearly flat delinquency rate growth of just 0.73%. This stability contrasts with national trends, suggesting that St. John’s residents are managing debt more effectively. The city’s relatively low cost of living and resilient local economy contribute to this positive trend.

Fort McMurray: High debt, controlled delinquencies

Fort McMurray maintains the highest average debt in Canada at $37,915, with a modest 1.21% increase YoY. Despite its significant debt burden, delinquency rates rose by only 6.60%, reaching 2.25%. This unique trend reflects the city’s resource-heavy economy, where high wages often come with high levels of borrowing. Fort McMurray’s relatively controlled delinquency increase suggests resilience among its residents.

Key findings:

1. 1 Urban centres space rising strain: Cities like Toronto, Vancouver, and Montreal are grappling with high delinquency rate growth driven by housing affordability issues and rising living costs.
2. 2 Regional resilience in smaller cities: Halifax and St. John’s demonstrate relative stability, with moderate debt growth and low delinquency increases.
3. 3 Alberta's challenges: Calgary and Edmonton reflect Alberta’s broader economic struggles, with significant delinquency growth despite stable debt levels.
4. 4 Unique outlier - Fort McMurray: Fort McMurray’s high debt levels but controlled delinquency rates highlight the unique dynamics of resource-dependent economies.

Generational debt and delinquency trends

Debt and delinquency trends across Canadian age groups reveal how financial challenges vary at different stages of life. From young adults navigating financial independence to retirees managing fixed incomes, this generational analysis highlights unique pressures faced by each cohort. These trends underscore the importance of targeted financial support and education tailored to life-stage needs.

Generational highlights

18-25: Navigating financial independence

Young adults aged 18–25 experienced a 4.72% increase in average debt, reaching $8,267, alongside a 17.02% rise in delinquency rates, reaching 1.81%. These figures reflect the financial growing pains of early adulthood, as this group takes on new responsibilities such as student loans, first credit cards, and entry-level wages. The significant delinquency increase highlights challenges in managing debt due to limited financial experience and precarious income sources.

26-35: Balancing ambition and financial stability

Debt for the 26–35 age group grew by 1.90%, reaching $17,485, with delinquency rates increasing by 19.33% to 2.04%. This stage of life is marked by key milestones such as homeownership, family planning, and career advancement. The rising delinquency rates indicate that these financial commitments are straining household budgets, as many in this cohort struggle to balance long-term investments with short-term cash flow needs.

36-45: Mid-life financial peak

The 36–45 age group saw a 3.17% increase in debt, reaching $26,984, while delinquency rates jumped by 24.40%, the largest YoY increase among all groups. Often managing mortgages, childcare, and other significant expenses, this group faces peak financial obligations. The sharp rise in delinquencies signals growing challenges in maintaining financial stability, particularly amid rising costs and stagnant income growth.

56-65: Financial strain despite stability

Average debt for the 46–55 age group increased by 4.75%, reaching $34,317, the highest among all cohorts. Delinquency rates also rose by 21.43%, reaching 1.25%. This group represents individuals in their prime earning years, often managing ongoing mortgage payments, education expenses for children, and saving for retirement. The increase in delinquency rates suggests that even with higher incomes, many are struggling to keep pace with rising debt.

65+: Managing debt on fixed incomes

Among retirees aged 65 and older, average debt rose by 3.61% to $14,575, while delinquency rates increased modestly by 8.12% to 1.08%. This group has the lowest debt levels, reflecting more cautious borrowing behaviors, but the data suggests that rising living and healthcare costs are stretching fixed incomes. The moderate delinquency increase highlights the difficulties some retirees face in maintaining financial stability.

Key takeaways:

1. 1 Younger generations face financial independence: High delinquency growth among younger Canadians reflects limited financial literacy and reliance on precarious income sources.
2. 2 Mid-life financial pressures are increasing: The 36–45 and 46–55 age groups face significant financial burdens, including mortgages and family expenses, contributing to rising delinquency rates.
3. 3 Pre-retirees are at risk: Debt surges in the 56–65 age group highlight the challenges of balancing financial obligations while preparing for retirement.
4. 4 Retirees feel the squeeze: Fixed incomes and rising costs leave retirees with limited flexibility, making even modest debt harder to manage.

This age-based analysis underscores the importance of generationally tailored financial solutions. Younger Canadians may benefit from targeted financial literacy programs, while pre-retirees and retirees require accessible tools for managing debt and planning for fixed incomes. Policymakers and financial institutions must address these diverse needs to build a more financially resilient population.

Conclusion

Canada’s rising debt and delinquency rates reveal a nation grappling with significant financial challenges. From modest debt growth to surging delinquencies, this study underscores the fragility of household financial health in the face of persistent inflation, stagnant wages, and high borrowing costs.

Key findings highlight:

• The disproportionate rise in delinquency rates compared to debt growth, pointing to widespread financial strain.
• Regional disparities, with provinces like Quebec and Ontario experiencing sharp delinquency increases, while Newfoundland showcases resilience.
• Urban centers like Toronto and Vancouver facing unique pressures tied to housing costs, contrasted with relative stability in smaller cities like Halifax and St. John’s.
• Generational differences, with young adults and pre-retirees bearing the brunt of financial vulnerability, while retirees navigate fixed incomes and rising living costs.

Recommendations

To mitigate these challenges, coordinated action is critical:

1. 1 Expand financial education: Programs targeting young adults can equip them with tools to manage debt effectively and build long-term stability.
2. 2 Enhance debt relief programs: Policymakers and financial institutions must collaborate to develop accessible repayment options for those at risk of default.
3. 3 Address housing affordability: Urban-focused initiatives can alleviate cost-of-living pressures, reducing reliance on credit for basic needs.
4. 4 Support retirement planning: Tailored financial products and advice can help pre-retirees and retirees balance debt while preparing for long-term stability in retirement.

A comprehensive response to these issues will not only aid individual households but also contribute to broader economic resilience.

Nicholas Rizzo Contributing Research Analyst & Digital PR

Nicholas Rizzo Contributing Research Analyst & Digital PR

Nicholas Rizzo is an expert in data-driven research and digital PR, with eight years of experience specializing in crafting original data studies and research for brands by turning complex datasets into compelling, data-centric narratives that are thee authoritative source to speak to the questions, topics, trends, and news that are core to their industry and target audiences.

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