Amid interest rate hikes and high inflation, more Canadians are turning to credit for relief, with consumer debt hitting a new record in the first quarter of 2023.

In a new report released Wednesday by TransUnion, the amount of outstanding debt that Canadians have amassed across all credit products has reached a new record of $2.32 trillion.

The number of Canadians with access to credit increased to 30.6 million, which is up 2.9 per cent from last year. Among existing credit debt, the volume of consumers adding additional credit products increased by 6.2 per cent. TransUnion says this is being driven by Gen Z consumers entering the credit market and new Canadians.

Higher credit balances drove minimum monthly payments higher and put pressure on consumers to use additional disposable income to cover payments in particular mortgages and lines of credit—which are vulnerable to interest rate changes.

The average line of credit monthly payment increased to $436, a 43 per cent increase year over year. While the average monthly mortgage payment rose to $2,032, a 15 per cent increase year over year.

The average payment for credit cards was 2.6 times over the minimum required. “This is a positive sign indicating healthy consumer behaviors towards their payment obligations,” said TransUnion’s press release.

The percentage of consumers past due on any account for 90 days or more, also referred to credit delinquency, increased by nine basis points to 1.57 per cent. The report notes that despite the increase, overall delinquency levels remain below pre-pandemic levels.

“As available disposable incomes become more stretched, we expect a segment of consumers will be more likely to miss payments, and as a result, that delinquency rates will rise,” said Matt Fabian, director of financial services research and consulting at TransUnion in Canada, in a press release Wednesday. “However, we expect any rise in delinquency rates to be moderate and in line with increased credit activity.”

TransUnions says it expects delinquency rates in Q1 of 2024 to be back to pre-pandemic levels at 2.19 per cent.

“Overall, the financial position of Canadian credit consumers improved coming out of the pandemic, bolstered by higher savings accumulated through the pandemic and supported by a strong labour market,” added Fabian.