Gen Z and Newcomers Drive $2.5 T Debt Surge, TransUnion Warns of Rising Delinquencies

Total consumer debt in Canada hit $2.5 trillion in Q1, up 4.7 percent from last year, and most of the acceleration came from Gen Z and new-to-credit immigrants, TransUnion reports. Young borrowers saw their balances rocket 30.6 percent, chasing higher living costs with credit cards and lines of credit even as interest rates remain elevated. Subprime households are feeling the pinch first: delinquency rose to 2.7 percent, with missed payments concentrated among recent entrants to Canada and consumers at the bottom of the credit-score ladder.

TransUnion director Matt Fabian says the data flash a yellow light for lenders, who now face a “critical moment” to tighten risk models before modest strains morph into default waves. While overall balances are still below pandemic peaks, the mix has shifted toward longer-term, higher-interest products—meaning every rate hike bites harder. Rising rents, sticky inflation and slowing wage gains leave many twenty-somethings juggling multiple bills; some are already leaning on buy-now-pay-later plans to cover basics.

The report arrives as policymakers debate whether cooling price growth justifies a summertime rate cut. For households, relief can’t come soon enough: the average credit-card holder now carries a balance roughly 16 percent larger than a year ago, and mortgage renewals at higher rates loom. Fabian’s takeaway? Lenders need sharper early-warning systems, and consumers—especially new arrivals—should map out budgets before “plastic patch-ups” turn into expensive anchors.