More than half a million Canadians have fallen behind on their various credit payments, fuelling a 19 per cent rise in the average national delinquency rate in the one-year period ending May 31, 2009, says a new report from Equifax Canada.

The credit bureau called the double-digit jump “alarming,” noting the average delinquency rate for Canada hit 1.52 per cent at the end of May.

Much of the trouble stemmed from missed payments on credit card bills and for sales finance purchases of items such as furniture and electronics.

Equifax defines delinquent bills as those that are at least 90 days overdue.

Nadim Abdo, an Equifax vice-president, stressed the “sharpest increase” in delinquencies resulted from credit card and sales finance purchases, which have risen by 38 per cent and 58 per cent, respectively, since May 2008.

Rising delinquencies in those areas are troubling because consumers tend to miss payments on those unsecured credit products before they fail to pay back collateral-backed loans such as mortgages, bank loans and lines of credit, Abdo said.

US Credit Card Delinquency Rate Jumps 11 Percent

Inquiring minds might be asking for a comparison between Canada and the US. For the answer, please consider 1Q credit card delinquency rate jumps 11 percent.

Credit card holders who in ordinary years might have used their tax refunds to pay down their balances apparently spent the money elsewhere as the recession deepened in the first quarter.

That’s one of the conclusions that may be drawn from data showing the delinquency rate for bank-issued credit cards rose 11 percent in the first three months of the year, according to credit reporting agency TransUnion.

The delinquency rate jumped to 1.32 percent this year, from 1.19 percent in the first three months of 2008, TransUnion said. The statistic measures the percentage of card holders who are three months or more past due on their payments for cards bearing MasterCard and Visa logos, along with American Express and Discover cards.

The average total debt on bank cards also rose, jumping to $5,776 from $5,548 last year.

TransUnion measures credit card delinquencies at 90 days, but tracks mortgage delinquencies at 60 days. Becker said that is because card payments are typically much smaller than mortgage payments, and it’s easier to catch up on past due cards. For people in financial distress, it’s much harder to produce two mortgage payments once they fall behind, he explained.

Not surprisingly, bank card delinquency rates remained the highest in the states hardest hit by the mortgage meltdown: Nevada, Florida, Arizona and California.

North and South Dakota and Alaska, the states with the lowest rate of mortgage delinquencies, are also the states with the lowest credit card delinquencies, TransUnion data showed.

TransUnion, which samples 27 million consumer records to produce its data, expects the rate of credit card delinquencies to rise for the rest of the year, ultimately reaching about 1.7 percent.

Note that the US rate was a comparison of March 2009 to March 2008 while the rate for Canada was a comparison of May 2009 to May 2008. Thus Canada and the US are following a similar path.

Dynamic Maps

The Federal Reserve Bank of New York has Dynamic Maps of Bank Card and Mortgage Delinquencies in the United States that some may wish to consider.

In regards to mortgages, Canada has some “catching down” to do, and it will. All the bubble areas such as Vancouver, Calgary, Toronto, etc are going to get hit hard.

Mike “Mish” Shedlock

http://globaleconomicanalysis.blogspot.com

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Mike “Mish” Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

http://offshoreinn.com/investing/500000-canadians-90-days-behind-on-credit-payments-delinquency-rate-hits-152-us-delinquency-rate-is-132/

reviewed by Moishe Alexander, CFC CEO

But rebounding sales in some of the most expensive markets skewed the national average price, the Canadian Real Estate Association said in the report.

The average home price last month rose 0.4 percent to C$319,757 ($282,971), topping the previous record set a year earlier. It was the first year-over-year increase since May last year.

The average price has recovered 16.4 percent from the low reached in January, CREA said.

Home sales rose 8 percent to 37,649 units in May from April, the fourth consecutive monthly increase on a seasonally adjusted basis.

At the start of the year, the year-over-year drop in sales was a staggering 41 percent and the declines have narrowed since. Nationally, 49,521 units changed hands in May, down 0.8 percent from a year ago.

‘In the short space of about 18 months, the housing market has gone full circle from a sellers’ market, to a flat-out buyers’ market, and back to a sellers’ market,’ said Doug Porter, deputy chief economist at BMO Capital Markets.

He cautioned that further gains may be tougher to come by with a still-weak Canadian employment outlook.

‘The housing market is not about to go off to the races, even if it has been pulled back from the brink.’

Of the 25 major markets that CREA tracks, 14 reported rises in unit sales year-over-year, with five markets, mostly in the western provinces of Alberta and British Columbia, posting double-digit increases.

Those same markets had suffered the biggest drops only several months ago.

Prices rose in 14 markets from a year ago, led by a 17.3 percent increase in Newfoundland and Labrador and a 12.1 percent climb in Saint John, New Brunswick.

‘New records were posted in only 15 percent of local markets in May, none of which are among the most active or expensive,’ CREA said.

‘The strong rebound in sales activity, not price, in Canada’s most expensive markets is driving up average prices nationally and in some provinces, just as a sharp decline in activity in these markets pushed average prices lower in late 2008.’

New listings eased by 0.8 percent to 65,070 units, the lowest since December 2005.

($1=$1.13 Canadian)

(Reporting by Ka Yan Ng; Editing by Frank McGurty) Keywords: CANADA HOUSING/

(kayan.ng@reuters.com; Reuters Messaging: kayan.ng.reuters.com@reuters.net; 416-941-8109)

http://www.xe.com/news/2009/06/15/485397.htm