Millennials overtake baby boomers on debt for the first time

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Millennials are now the largest debt holders in Canada, overtaking baby boomers for the first time, says a quarterly study out today.

TransUnion’s Consumer Pulse for the fourth quarter of 2024 shows this group, aged 29 to 44, hold 27 per cent of credit accounts, the largest share of consumers by age group in Canada’s credit market.

Millennials also hold the most debt at $911 billion, about 38 per cent of all Canadian debt.

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TransUnion says this is likely because millennials have reached the age when they are having children and buying homes, but they are not finding the debt an easy burden to bear.

The study found that 26 per cent of Canadians say they expect not to be able to pay at least one of their current bills and loans in full, but that rate rises to 35 per cent among millennials, the highest rate of any age group.

The Bank of Canada has cut its interest rate from 5 per cent to 3.25 per cent since last June, easing the pressure on indebted consumers. But the study shows that Canadians continue to feel the pinch on their personal finances.

“While economic indicators show that consumers are likely to enjoy some relief from their financial pressures in 2025, many are still navigating the challenges caused by the highest interest rates since 2001 we recently experienced,” said Matthew Fabian, director of financial services research and consulting at TransUnion Canada.

Despite this, 22 per cent say they intend to take on more debt or refinance in the coming year, a sign that some Canadians are turning to credit to make ends meet.

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Another study by insolvency trustee Harris & Partners found over half of Canadians polled have borrowed money in the past two years just to cover essentials like food, rent, or utilities.

Gen Z, aged 13 to 28, are the generation most eager to take on new debt, with 34 per cent saying they plan for apply for new credit.

TransUnion also found that with interest rates still high, buying a home has been put on the back burner for many Canadians.

Over three quarters of those surveyed say they are unlikely to buy a new home in the coming year, up from 72 per cent in the fourth quarter of 2023.

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The loonie got a big, albeit brief, boost yesterday when Prime Minister Justin Trudeau announced he would step down once the Liberal Party chooses a new leader.

The Canadian dollar rose as much as 1.2 per cent to over 70 cents U.S. Monday morning, Bloomberg reports.

The loonie has languished at its lowest level since March 2020 since early December when the ruling Liberal party was thrown into crisis after the surprise resignation of finance minister Chrystia Freeland.

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But analysts warned not to expect Monday’s gains to last.

“While the ongoing political drama in Ottawa could trigger some interesting intraday moves in the CAD, the loonie may not yet be ready to spread its wings and fly,” said Valentin Marinov, head of G-10 FX strategy at Credit Agricole.

• The CEOs of Canada’s biggest banks will speak at the RBC Capital Markets Canadian Bank CEO Conference today. Executives include RBC’s Dave McKay, BMO’s Darryl White and Scotiabank’s Scott Thomson
• Today’s Data: Canada international merchandise trade, United States trade balance

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Jessica Moorhouse, millennial money expert and podcast host, built her platform on teaching others about financial literacy. Read her five tips for starting off the year and being kind to yourself.

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Calling Canadian families with younger kids or teens: Whether it’s budgeting, spending, investing, paying off debt, or just paying the bills, does your family have any financial resolutions for the coming year? Let us know at wealth@postmedia.com.

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McLister on mortgages

Want to learn more about mortgages? Mortgage strategist Robert McLister’s Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus check his mortgage rate page for Canada’s lowest national mortgage rates, updated daily.

Financial Post on YouTube

Visit the Financial Post’s YouTube channel for interviews with Canada’s leading experts in business, economics, housing, the energy sector and more.

Today’s Posthaste was written by Pamela Heaven, with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

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