Rising Costs of Living: Non-Homeowners Twice as Likely to be Missing Bill Payments than Homeowners [Study]

As the country gets ready for a federal election later this month, the rising cost of living has been identified as one of the top issues for Canadians, according to a survey by Abacus. People across the country experience affordability issues in different ways. Some Canadians have more trouble managing their debt and finances than others. 

Looking at missed bill payments as an indicator of challenges to meet costs of living, data from Borrowell, a fintech company that offers free credit report monitoring, suggests that consumers who don’t own a home may have more trouble managing their debts than homeowners, even though non-homeowners have less total debt to pay. 

For consumers with a mortgage trade on their credit report, their average mortgage balance was $359,597 and their average non-mortgage debt was $34,290; in comparison, consumers without a mortgage had debt averaging $20,183, but were 2.2x more likely to have a missed bill payment on their credit report. 

The study findings and infographic below were based on over 874,000 credit reports of Borrowell members ages 20 to 69 for August 2021 across 15 major cities. The goal of the study was to understand how much mortgage and non-mortgage debt homeowners and non-homeowners hold, along with how likely they were to have a missed bill payment on their credit report.

Definitions

The average number of missed payments is calculated as the total number of missed payments across all credit accounts listed in credit reports, divided by the number of credit reports analyzed. Average non-mortgage debt is the total installment loan balances (such as personal loans and car loans) and revolving balances (such as credit cards and lines of credit) across all credit accounts listed in credit reports, divided by the number of credit reports analyzed.

For this study, homeowners are considered to be consumers with active mortgages on their credit reports. The presence of a mortgage likely indicates ownership of a property; however, a mortgage trade will not be on a credit report if a consumer has fully paid off their mortgages.

Credit reports were pulled from Equifax Canada. 

Key Findings

• On average, 2 out of every 10 consumers have at least one missed payment on their credit report

• Non-homeowners have 1.7x less non-mortgage debt than homeowners, but are more than twice as likely to miss a bill payment than homeowners

• 1 in 4 consumers in Edmonton and Calgary have a missed payment on their credit report, compared to about 1 in 10 consumers in Toronto and Montreal

• The average consumer debt (excluding mortgages) for Canadians in August 2021 was $23,125: Calgary ($26,760), Edmonton ($25,291), and Saskatoon ($25,032) have the highest levels of non-mortgage debt, while Montreal ($11,826), Hamilton ($17,992), and Toronto ($20,006) have the lowest levels of non-mortgage debt

• For non-homeowners:

  • Average non-mortgage debt for non-homeowners in August 2021 was $20,183

  • Average number of missed payments per non-homeowner in Canada is 0.234, or about 23 out of 100 non-homeowners had a missed bill payment

• For homeowners: 

  • Average consumer debt (excluding mortgages) for homeowners in August 2021 was $34,290, 1.7x higher than non-homeowners

  • Average mortgage debt for homeowners in August 2021 was $359,597

  • The average number of missed payments per homeowners in Canada is 0.107, or about 10 out of 100 homeowners had a missed bill payment

Homeowners have 20x More Debt than Non-Homeowners, but are Half as Likely to Miss Bill Payments

Comparing average debt and missed payments data between non-homeowners and homeowners yields some notable differences. Average homeowners in Canada have $34,290 in non-mortgage debt; this is 1.7x larger than the $20,097 in non-mortgage debt that average non-homeowners in Canada have.

When taking into account mortgage debt, homeowners have almost 20x more debt than non-homeowners ($359,597 in mortgage debt plus $34,290 in non-mortgage debt for homeowners, compared to $20,097 in non-mortgage debt for non-homeowners). Despite this, non-homeowners are still over two times more likely to miss bill payments than their home-owning counterparts (0.234 missed bill payments per non-homeowner vs. 0.107 missed bill payments per homeowner), signalling that non-homeowners in Canada are facing more challenges than homeowners when it comes to financial stability and meeting rising costs of living. 

The rise in home prices recently also means that homeowners are benefiting from asset appreciation and can leverage the value of their home to help with short-term cash flow challenges, an option that non-homeowners don’t have.

Buying homes in the future could pose a challenge for non-homeowners who are currently struggling to pay their bills on time. In addition to the challenge of saving for a down payment, a good credit score is essential for Canadians to qualify for a mortgage, and payment history is the largest factor that impacts credit scores.

Disparities Between Homeowners and Non-Homeowners Biggest in Cities with High Home Prices: Vancouver, Toronto, and Surrey

When analyzing average debt and missed payments of consumers, regional trends can be seen across Canada. For instance, homeowners in cities with higher average home prices appear to have a stronger grasp of their bill payments than other consumers. 

Despite having the largest mortgage balances, homeowners in Vancouver ($595,100), Toronto ($574,246), and Surrey ($574,324) are the least likely to have missed bill payments compared to homeowners in other cities. Conversely, homeowners in cities with lower mortgage balances have higher chances of missing bill payments. Homeowners in Regina ($261,325), Winnipeg ($263,857), and Saskatoon ($280,842) are more than 3 times more likely to have missed bill payments than homeowners in Vancouver, Toronto, and Surrey

Within all 15 Canadian cities included in the study, homeowners have lower rates of missed bill payments than non-homeowners. Canadians who are able to own homes tend to have higher incomes than non-homeowners. This means they are able to carry higher debt balances with a lower risk of missing bill payments. The cities that have the biggest difference in missed bill payment rates between homeowners and non-homeowners are Surrey (0.059 vs. 0.281), Toronto (0.030 vs. 0.129) and Vancouver (0.044 vs. 0.196). Non-homeowners in these cities are over four times more likely to have missed bill payments compared to their home-owning counterparts.

These missed payment stats indicate that rising living costs are quite pronounced for non-homeowners or renters in these major cities. Average rent prices in Vancouver and Toronto are among the highest in Canada, and average home prices are above $1 million, pushing homeownership and financial stability further out of reach for renters in these cities. 

The cities where homeowners and non-homeowners with the least disparity for rates of missed bill payments are Regina (0.170 vs. 0.199), Saskatoon (0.130 vs. 0.194), and Winnipeg (0.136 vs. 0.217). Non-homeowners in these cities are only 1.4x more likely to have missed bill payments compared to homeowners.

Renters and Homeowners Face Different Hurdles Amidst Rising Costs of Living

“It’s clear why the rising cost of living is the number one issue for Canadians leading up to this election, with many communities across the country facing significant strain,” says Andrew Graham, co-founder and CEO of Borrowell. “One in every five Canadians on average has at least one missed bill payment. Every bill payment matters, and one delinquent bill can be the difference between being approved or denied for additional credit. 

And although missed bill payment rates are lower in Vancouver or Toronto than the national average, the large difference between missed bill payment rates for homeowners and non-homeowners in these cities shows the significant hurdles facing Canadians in the rental market. High rental prices and a hot housing market are making it extremely difficult for those in Vancouver, Toronto, and other major cities to get their foot in the housing market and safely obtain some form of financial stability.”

Infographic: Average Debt and Missed Payments per Consumer in Canada, by City and Homeownership

Average Missed Payments and Debt Balances by City and Homeownership in Canada

Cities with the biggest differences in missed bill payment rates between homeowners and non-homeowners:

1. Surrey: 4.76x (0.059 vs. 0.281 missed bill payments for homeowners and non-homeowners)

2. Vancouver: 4.45x (0.044 vs. 0.196 missed bill payments for homeowners and non-homeowners)

3. Toronto: 4.3x (0.030 vs. 0.129 missed bill payments for homeowners and non-homeowners)

Cities with the biggest mortgage balances, out of for consumers with a mortgage:

1. Vancouver: $595,100

2. Surrey: $574,324

3. Toronto: $574,246

Cities with the biggest non-mortgage debt balances:

1. Calgary: $26,760 ($36,330 vs. $20,787 for homeowners and non-homeowners)

2. Edmonton: $25,291 ($35,802 vs. $22,258 for homeowners and non-homeowners)

3. Saskatoon: $25,032 ($35,593 vs. $21,916 for homeowners and non-homeowners)

Methodology

Report findings are based on credit report data of 874,111 Borrowell members in Canada between the ages of 20 and 69 for August 2021. Findings may not represent the entire population. Credit reports of Borrowell members are provided by Equifax Canada. Cities are based on the location in members’ profiles.

The average number of missed payments is calculated as the total number of missed payments across all credit accounts listed in credit reports, divided by the number of credit reports analyzed. 

Non-mortgage debt is defined as the total balance on installment credit accounts (such as personal loans and auto loans) and revolving credit accounts (such as credit cards and lines of credit) listed on credit reports.  

Non-homeowners are consumers who do not have a mortgage trade present on their latest credit report. Homeowners are consumers with an active mortgage, which is listed as a mortgage trade on their credit reports. For this study, homeowners do not include consumers who have fully paid off their mortgages.

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