{"id":4643,"date":"2018-04-10T10:53:46","date_gmt":"2018-04-10T14:53:46","guid":{"rendered":"http:\/\/lifeinsurance-orleans.ca\/Life-Insurance-Blog\/cracks-starting-to-show-in-canadian-credit-quality-rbc-says\/"},"modified":"2018-04-10T10:53:46","modified_gmt":"2018-04-10T14:53:46","slug":"cracks-starting-to-show-in-canadian-credit-quality-rbc-says","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2018\/04\/10\/cracks-starting-to-show-in-canadian-credit-quality-rbc-says\/","title":{"rendered":"Cracks are starting to show in Canadians\u2019 credit quality, RBC warns"},"content":{"rendered":"<div>The quality of Canadian consumer credit is beginning to deteriorate, according to Royal Bank of Canada credit analyst Vivek Selot.<\/p>\n<p>The roll rate \u2014 the percentage of credit card users who \u201croll\u201d from early stage delinquencies to 60-89 day delinquencies \u2014 reached the highest since 2008 for one credit card program, while delinquencies for another program were above the 10-year average, Selot said in a monthly analysis of credit securitization programs.<\/p>\n<p>\u201cCracks are starting to show in more and more places,\u201d Selot said Monday in a note to clients. He declined to comment further.<\/p>\n<ul>\n<li>Bank of Canada\u2019s latest indicator cliches it \u2014 interest rates are going up soon<\/li>\n<li>&#8216;Getting close to the bottom&#8217;: Housing affordability relief likely to be short-lived, says RBC<\/li>\n<li>Three real-life signs that interest rate hikes are already starting to bite<\/li>\n<\/ul>\n<p>Strong labour markets and historically low borrowing costs have allowed Canada\u2019s households to amass one of the highest debt-to-income ratios in the developed world. Now rising interest rates and a cooling real estate market are prompting speculation the debt burden poses a threat to the financial system.<\/p>\n<p>Roll rates in National Bank of Canada\u2019s Canadian Credit Card Trust program are at the highest since 2008, while for CIBC\u2019s CARDS II program, early stage delinquencies, 60-89 day delinquencies and roll rates are all above the 10-year average, Selot said.<\/p>\n<p>Heloc Program<\/p>\n<p>In February, BMO\u2019s home equity line of credit securitization program Fortified Trust registered a loss rate of 12 basis points, the highest level since the program\u2019s inception in 2016, the analyst said.<\/p>\n<p>To be sure, Selot pointed out \u201cconsumer credit quality seems benign,\u201d with charge-offs \u2014 or recognized losses \u2014 remaining near cyclical lows. The average payment rate in February fell about 600 basis points from January to 41.1 percent but was up 162 basis points from the same month a year earlier.<\/p>\n<p>That said, any potential indications of an inflection point are worth monitoring, the analyst wrote. Last month, Moody\u2019s Investors Service joined the Bank for International Settlements and S&#038;P Global Ratings to warn that Canada\u2019s banking system, dominated by five large lenders, is facing a growing threat of souring consumer loans.<\/p>\n<p>\u201cConsidering that fragile household balance sheets could be a precipitating factor for the credit cycle to turn, any signs of consumer credit quality deterioration seem worthy of attention,\u201d Selot wrote.<\/p>\n<p>The Bank of Canada makes its next rate decision on April 18.<\/p>\n<p>Bloomberg.com<\/p>\n<\/div>\n<p><a href=\"http:\/\/lifeinsurance-orleans.ca\/Life-Insurance-Blog\/\">Life Insurance Blog<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The quality of Canadian consumer credit is beginning to deteriorate, according to Royal Bank of Canada credit analyst Vivek Selot. The roll rate \u2014 the percentage of credit card users who \u201croll\u201d from early&#46;&#46;&#46;<\/p>\n","protected":false},"author":221,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/4643"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/221"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=4643"}],"version-history":[{"count":0,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/4643\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=4643"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=4643"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=4643"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}