Canadian Consumer debt Trends Show Concerning Signs for Young Adults in Early 2025
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Analysis reveals increased debt burdens, especially among 18-25 year olds, driven by car loans and economic uncertainty.
By Amelia Thompson | TORONTO – 2025/05/28 07:51:37
A recent report indicates that young Canadians are increasingly struggling with debt. The Market Pulse Consumer Credit Trends and Insights report highlights that individuals aged 18-25 are experiencing a significant rise in financial strain, with a 15.1% increase in debt-related concerns. The report suggests that this is largely due to difficulties in repaying car loans.
Across the broader population, the percentage of Canadians missing payment deadlines has also increased, with an 8.9% rise among those without mortgages and a 6.5% increase among mortgage holders. the province of Ontario is reportedly the most affected.
Rising Debt Levels and Automotive Market Influence
“Economic uncertainty continues to influence the use of credit and financial health of Canadian consumers.”
The average non-mortgage debt per consumer has reached $21,859, attributed to an active automotive market where buyers sought to purchase before anticipated price increases.
Total consumer debt in Canada reached $2.55 trillion at the close of the first quarter of 2025, marking a 4% increase year-over-year, although it represents a $6 billion decrease from the end of 2024.
In spring, there is generally an increase in mortgage debts, but at [premier trimestre] 2025, they actually fell
notes Rebecca Oakes, vice-president of advanced analytics for Equifax Canada, pointing out an unexpected shift in mortgage trends.
Credit Card Usage Declines Amidst Economic Uncertainty
Equifax reports a decrease in new credit card openings by 10.3%,and average monthly spending per card has dropped by $107,reaching its lowest point since March 2022,reflecting consumer caution.
Mortgage Renegotiations Surge
The beginning of the year saw a surge in mortgage renewals,referred to as the Large renegotiation
,with 28% of borrowers switching lenders. New mortgage loans have increased by 57.7% compared to the previous year, driven by renewals and refinancing of loans originated during the pandemic. The market also shows a resurgence of first buyers
, with a 40% increase in one year.
Frequently Asked Questions About Canadian Consumer Debt
- Q: What is considered consumer debt in Canada?
- A: Consumer debt includes all forms of debt held by individuals excluding mortgages, such as credit card balances, auto loans, and personal loans.
- Q: Why is young adult debt increasing?
- A: The report suggests that difficulties in repaying car loans are a primary driver of increased debt among young adults.
- Q: What is the average non-mortgage debt per consumer in Canada?
- A: The average non-mortgage debt per consumer is approximately $21,859.
- Q: How are rising interest rates affecting consumer debt?
- A: Rising interest rates make it more expensive to borrow money, increasing the burden of existing debt and potentially leading to higher default rates.
- Q: What resources are available for Canadians struggling with debt?
- A: the Financial Consumer Agency of canada (FCAC) and various non-profit credit counseling agencies offer resources and support for managing debt.
