Rising Delinquency Rates and Financial Strain: A Close Look at Manitoba's Debt Landscape in 2023

A rising tide of Manitobans are falling behind on their loan and credit payments, according to fresh data from Equifax, a leading credit reporting agency.

As of the first quarter of 2023, the typical debt per account in Manitoba stood at $16,805, not including mortgage debt. Though this marks a less-than-one-per-cent increase from the previous year, the delinquency rate—a measure indicating missed payments for at least three consecutive months—has surged by nearly 30%.

"Severe financial difficulty is what we're dealing with," commented Rebecca Oakes, the Vice President of Advanced Analytics at Equifax Canada.

Approximately 1.45% of accounts in Manitoba are now classified as delinquent, based on Equifax's data set that covers both personal and business accounts, yet excludes mortgages. Manitoba’s rate is second only to Alberta, which reports a 1.46% delinquency rate among its accounts.

Rebecca Oakes noted a change in the demographic profile of those grappling with delinquent debt. "While young people and those with lower incomes were predominantly struggling at the end of 2022, it's now increasingly becoming an issue for homeowners," she observed.

As mortgage payments soar, many are prioritizing them over other financial commitments. "People generally give precedence to their mortgage payments, relegating other debt commitments to a lower priority," Oakes elaborated.

Credit card bills, installment loans, and car payments are the debts Manitobans are most frequently failing to pay. "Missed automobile payments, in particular, are now more common than they were before the pandemic," added Oakes.

She also warned of potential ripple effects if the Bank of Canada's key interest rate—already hiked to 4.5% since March 2022—goes up further. "It's important for consumers to be proactive about their finances, especially given that another rate hike could be on the horizon," Oakes advised.

Meanwhile, a recent poll from the Angus Reid Institute paints a grim picture: about one-third of Manitobans report experiencing financial hardships, and another 20% find their financial situation uncomfortable.

Olly Tirtoprodjo, a resident grappling with a rising mortgage, described the unpredictability. "It’s impossible to predict what will happen next with these rates," he stated. He paid around $1,250 in monthly mortgage fees two years ago; now, it's more than $1,700. "Finding additional sources of income is crucial," he suggested, endorsing options like dog-sitting or having a roommate.

In the same vein, mortgage specialist Laurie Boudreau of Castle Mortgage Group noted the difficulty of securing a home loan. "Years ago, I did lots of mortgages for single earners. Now you basically need a dual income, unless you’re making six figures," she said. Boudreau underscored this by pointing out that a $300,000 home once affordable at an income of $60,000 now requires at least $75,000 due to higher interest rates.

Despite the challenging economic landscape, Boudreau insists that all is not lost. "People still have choices," she said. "For instance, lengthening your mortgage term or refinancing could lighten the monthly financial load. And if you can, pay off other high-interest debts like car loans."

According to Angus Reid Institute's recent poll, 45% of Canadian mortgage holders find their loans very challenging to manage—a significant increase from 34% just one year ago. Additionally, 24% of Canadian renters are struggling significantly with rent, up from 19% last year.

The survey, conducted online from May 30 to June 2, included 2,808 Canadian adults, and since it was not based on a random sample, no margin of error applies.