youngsters and novices are driving increase in debt accumulation, according to TransUnion findings.
In the first quarter of 2025, TransUnion's debt report indicates an escalation in total debt levels compared to the previous year. This growth is predominantly driven by Gen Z consumers and newcomers to Canada.
According to the report, outstanding balances for Gen Z increased by 30.6% year-over-year. As a result, total outstanding debt swelled by 4.7% to $2.5 trillion in the first quarter of 2025.
Furthermore, delinquencies, or missed payments, rose by 11 basis points year-over-year to 2.7%, mainly attributable to new-to-credit consumers. The report also sheds light on subprime consumers who struggled, with their delinquency rates surging at a higher rate compared to prime and above-prime consumers.
Matt Fabian, Director of Financial Services Research at TransUnion Canada, emphasized the implications for lenders due to the increase in balances accrued by high-risk credit consumers, signaling a critical moment for risk reassessment strategies.
Data from Statistics Canada reveals a spike in credit card balances, an increase in other forms of non-mortgage borrowing, and a growth in mortgage debt activity. These trends contribute to the escalating overall consumer debt levels. Inflation and economic pressures are probable factors pushing young people and newcomers to borrow more to manage living costs.
This report by The Canadian Press was first published May 28, 2025.
[Ritika Dubey, The Canadian Press]
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