Canadian insolvencies rose in 2019 as more consumers filed for bankruptcies and consumer proposals.
According to the Government of Canada, between Q3 of 2018 and Q3 of 2019, the number of insolvency filings increased by about 4,000.
- Total insolvencies filed went from 31,139 in Q3 2018 to 35,535 in Q3 2019.
- Bankruptcies filed went from 14,158 in 2018 to 14,374 in 2019.
- Consumer proposals saw a big jump, going from 16,891 in 2018 to 21,161 in 2019.
Nearly all provinces saw a rise (Saskatchewan being the exception). Ontario, British Columbia, Alberta, and Newfoundland-Labrador saw the biggest rises year-over-year.
In addition, insolvencies are not only up year-over-year; they are also up over the past ten years.
CTV News reported that Canadians are filing the highest number of personal insolvencies in a decade.
October 2019 was the highest monthly reading since September 2009, when 15,645 Canadians filed for insolvency.
“Unemployment is relatively low, but there hasn’t been wage increases to match,” Lars Osberg, a professor at Dalhousie University’s department of economics, told CTVNews.ca in a phone interview at the time.
“Consumer debt is at a historic high and that becomes unbearable for certain people. Incomes have been rising at the top and increasingly stagnant at the middle.”
At the end of 2019, TransUnion Canada reported that overall credit card balances reached a record high of over $100 billion for the first time.
“While the Canadian economy has slowed, key measures like inflation and unemployment remain healthy and continue to bolster the market,” said Matt Fabian, director of financial services research and consulting for TransUnion Canada.
“However, a potential slowdown in the Canadian economy, combined with soft wage growth, heightened global economic uncertainty and potential further interest rate increases, may cause some challenges.”
The Canadian consumer credit market is expected to show “marginal growth” in 2020, according to TransUnion.
Mitigating Risk in a Changing Credit Market
As insolvencies are on the rise, it is increasingly important for mortgage lenders to manage risk and identify flags as quickly as possible in the process.
One key way to accomplish this is through property data information. For instance, with Fraud Check from Purview, lenders and insurers can customize up to 18 fraud checks, including verifying property value, estimating equity, checking for liens and other encumbrances on current properties, and more.
This can help paint a bigger picture of a client’s financial situation, which can in turn create stronger deals. If a flag is identified, lenders can investigate further to make sure the deal is viable for both them and their client.
In addition, the Purview Report can verify the property ownership, parties on title, estimate available equity, and much more.
Purview solutions can also help monitor existing clients and identify areas where financial products could help. Through PIN Monitoring, lenders can also see charges and changes to existing registrations in real-time and be alerted when they happen. An equity estimate could also reveal the potential for refinancing to consolidate debt.
Data accuracy and timeliness are paramount when mitigating risk. You need to ensure you are looking at the latest, most comprehensive information available. That is where Purview comes in. Our data is accurate, thorough, and up-to-date.
Learn more about how Purview helps mortgage lenders and financial professionals mitigate risk today. Call 1-855-787-8439 or visit www.purview.ca.