For mortgage brokers across the country, the report underscores growing concerns about Canadians’ reliance on unsecured credit, particularly among younger borrowers.
According to TransUnion, Canada’s total consumer debt hit $2.5 trillion in Q1, with growth fuelled by a 30.6% year-over-year increase in outstanding credit balances among Gen Z consumers. Meanwhile, newcomers to Canada accounted for $2.6 billion in new credit balances, at a 6.3% yearly increase.
“As a growing share of Gen Z consumers actively engage with credit, lenders face a pivotal opportunity to shape lifelong financial relationships,” said Matt Fabian, director of financial services research and consulting at TransUnion Canada.
Mortgage readiness slipping as unsecured debt climbs
Mortgage professionals say the data reflects what they’re seeing firsthand.
Tracy Valko, Founder and CVO at Valko Financial, says she’s seeing a growing trend of non-mortgage debt, particularly among younger Canadians and newcomers.
“Many Gen Z clients are already stretched before they even start the mortgage process,” she told Canadian Mortgage Trends. “Between student loans, credit card balances, and rising living expenses, it’s not uncommon for them to come in with high utilization and limited savings.”
Similarly, David van Noppen, Mortgage Agent and co-founder at More Than Enough, says that financial education is an increasingly vital missing piece.
“Newcomers are carrying high interest payday loan debt, and Gen Z see debt as a way of life, so they don’t typically understand the cost,” he says. “I spend a lot of time showing the cost of interest in my conversations.”
According to TransUnion’s report, line of credit balances grew 2.8% through Q1, with credit card balances rising by 3.2% due to both growth in new cards and higher consumer balances overall.
The pressure is most acute among below-prime and subprime consumers, who are not only taking on more unsecured debt, but also falling behind on repayments at faster rates.
TransUnion notes that subprime consumers are now twice as likely to experience delinquency within the first 12 months of opening a new credit card, compared with figures from 2020.
“These findings further demonstrate the increased vulnerability subprime borrowers have to macroeconomic factors, such as higher interest rates and increased cost of living”, writes TransUnion.
Ontario and Alberta lead the country in rising delinquencies
Geographically, the report sheds light on which regions are facing the greatest economic stress.
Alberta recorded the highest non-mortgage delinquency rate in the country at 2.35%, up 16 basis points from a year earlier. Ontario saw the sharpest increase in serious delinquencies, rising 17 basis points to 1.98%.
“Regional pressures are a major part of the conversation right now,” says Valko. “In Ontario, for example, especially in areas like the Waterloo Region, we’re seeing a combination of tech layoffs, rising rents, and general uncertainty around job security.”
TransUnion also pointed to ongoing economic uncertainty around tariffs, warning that potential trade actions could worsen delinquency rates in regions tied to vulnerable industries.
Why a proactive approach matters for brokers and borrowers
Some brokers say these worrying credit trends are prompting changes in how they counsel clients.
“My approach is to get ahead of the issue before it becomes a crisis,” says Valko. “The earlier that clients come to us, the more solutions we can explore together. We also talk about cash flow strategies, such as setting up structured payments, pausing certain expenses, or building a small emergency fund, even if it’s modest.”
Ross Taylor, broker and credit counsellor, echoes the need for more disciplined budgeting.
“Most debt I see is a result of overspending, not living within their means; treating credit like supplementary income, along with the general pressures from an increased cost of living,” he said. “People are often reluctant to eliminate poor habits.”
As these financial challenges become more common, brokers are increasingly taking a proactive approach, especially as the profile of the average first-time buyer grows more complex. Many are now encouraging longer timelines to homeownership for clients burdened by high-interest debt.
“I encourage clients to be upfront with their lenders,” Valko said. “Most lenders are open to working with borrowers who communicate early—whether that means restructuring payments or finding temporary relief solutions. But those doors close quickly if clients wait too long and fall behind.”
Visited 180 times, 180 visit(s) today
consumer credit consumer credit insights credit gen z matt fabian newcomers ross taylor steven brennan tracy valko transunion TransUnion Canada
Last modified: June 8, 2025
