Canada’s credit market is experiencing a significant demographic shift, with Generation Z emerging as the fastest-growing segment and demonstrating the most robust improvement in credit performance, according to TransUnion’s Q1 2026 Credit Industry Insights Report. While older generations may see their credit activity moderate, younger borrowers are poised to drive future growth, presenting both opportunities and challenges for lenders.
Gen Z’s Ascent in the Credit Landscape
In the first quarter of 2026, Gen Z significantly expanded its presence in Canada’s credit market. The cohort added over 460,000 credit-active consumers within the past year, marking a substantial 7.8 percent increase. This growth rate outpaced all other generations, signaling a strong and accelerating adoption of credit products among younger Canadians.
Beyond sheer numbers, Gen Z is also increasing its financial engagement. Their non-mortgage balances saw a year-over-year increase of more than 9 percent, the steepest rise observed across any age group. This trend suggests a transition from initial credit exploration to more active and substantial utilization of credit.
This dynamic growth among Gen Z is particularly noteworthy against a backdrop of slowing credit market expansion elsewhere. TransUnion’s analysis indicates that as older generations potentially reduce new borrowing and focus on debt repayment over the next three to five years, younger consumers like Gen Z will become increasingly pivotal in shaping the overall trajectory of credit growth in Canada.
Matt Fabian, Senior Director of Financial Services Research and Consulting at TransUnion Canada, views this demographic shift as a significant opportunity for lenders. "These trends could help lenders weigh risk against growth, especially among high-demand borrowers like Gen Z," Fabian commented. He characterized the evolving landscape not as a cause for alarm, but rather as a clear opening for financial institutions to adapt and engage with a growing and increasingly active consumer base. The improving risk picture, even as participation climbs, underscores the positive trajectory of Gen Z’s credit behavior.
Unpacking Gen Z’s Credit Performance
While Gen Z currently holds the highest delinquency rates among all generations, this is largely attributed to their shorter credit histories and lower average credit scores. However, the report highlights that their credit performance has demonstrably improved across all delinquency levels over the past year. Serious delinquency, defined as 90 days or more past due, saw a significant drop of 11 basis points, settling at 2.75 percent. This represents the strongest year-over-year improvement observed among any generation.
Currently, only 19.9 percent of Gen Z consumers fall into the "super prime" credit score category, compared to 42.2 percent of the total Canadian population. This gap suggests considerable room for credit scores to rise as these younger borrowers gain more experience with credit management and their financial histories mature. This upward potential in credit quality is a key factor for lenders to consider.
Key Trends in Consumer Credit
The broader Canadian credit market is showing signs of stabilization and normalization after periods of heightened activity and stress. TransUnion reported that overall consumer delinquency, measured by accounts 90 days or more past due, saw a slight year-over-year decrease to 1.86 percent in Q1 2026. Most credit products peaked in terms of delinquency in early 2025 before beginning to stabilize.
Average Non-Mortgage Balance Per Consumer by Generation (Q1 2025 vs. Q1 2026)
| Generation | Q1 2025 | Q1 2026 | YoY Change (%) |
|---|---|---|---|
| Gen Z | $12,483 | $13,621 | 9.1 |
| Millennials | $28,048 | $29,747 | 6.1 |
| Gen X | $41,234 | $42,226 | 2.4 |
| Baby Boomers | $25,177 | $25,128 | -0.2 |
| Silent Generation | $10,318 | $10,252 | -0.6 |
Source: TransUnion Canada Credit Database
While credit card and line of credit delinquencies are flattening, personal loans continue to exhibit repayment strain. Auto lending has seen an uptick in delinquencies, likely driven by a combination of escalating vehicle costs, higher financing rates, and potentially the impact of fraud.
Regional Disparities in Credit Performance
Credit performance across Canadian provinces shows a divergence, with Alberta standing out as a persistent outlier. The province recorded a delinquency rate of 2.43 percent in Q1 2026, an increase of 6 basis points year-over-year. This trend is consistent with regions historically tied to more volatile industries.
Conversely, several provinces experienced year-over-year declines in delinquency rates. Manitoba, Newfoundland and Labrador, Nova Scotia, and British Columbia all reported improvements.
Consumer-Level Delinquency Rate (90+ Days Past Due) on Any Credit Product by Province (Q1 2025 vs. Q1 2026)
| Region | Q1 2025 | Q1 2026 | YoY (bps) |
|---|---|---|---|
| Canada | 1.88% | 1.86% | -2 |
| Alberta | 2.37% | 2.43% | 6 |
| New Brunswick | 2.13% | 2.03% | -10 |
| Ontario | 2.00% | 2.00% | 0 |
| Manitoba | 2.13% | 1.96% | -17 |
| Nova Scotia | 2.04% | 1.95% | -9 |
| Saskatchewan | 1.97% | 1.95% | -2 |
| Newfoundland and Labrador | 1.91% | 1.79% | -12 |
| Prince Edward Island | 1.85% | 1.76% | -9 |
| British Columbia | 1.76% | 1.71% | -5 |
| Quebec | 1.37% | 1.36% | -1 |
Source: TransUnion Canada Credit Database
Mortgage Market Trends and Concerns
On the mortgage front, outstanding balances continued their upward trajectory. TransUnion reported a 3.85 percent year-over-year increase in total outstanding mortgage balances, reaching $1.91 trillion. The average mortgage balance grew by 4.3 percent to $290,528, a figure that likely reflects ongoing housing affordability challenges across the country.
The national 90-day mortgage delinquency rate stood at 0.19 percent in Q1 2026, a slight increase from 0.16 percent a year prior, but still within historical pre-pandemic ranges.
A more subtle, yet potentially significant, concern highlighted by TransUnion is the divergence between balance-level and account-level delinquency. The 90-day balance-level delinquency rate saw a substantial increase of 29.3 percent year-over-year. This indicates that higher-balance loans are disproportionately contributing to delinquencies. While overall delinquency rates remain contained, this trend suggests an amplification of potential loss severity for lenders, even if the total number of delinquent accounts is not drastically rising.
Fabian noted that while delinquency rates remain historically low, they are showing a gradual upward trend. This is attributed to the cumulative impact of higher interest rates, elevated housing costs, and persistent cost-of-living pressures, particularly affecting households in more expensive urban markets. The increasing balances and the rise in balance-level delinquency point towards "a gradual shift toward higher-severity risk," he cautioned.
Canada’s Consumer Credit Industry Indicator stood at 100.4 in Q1 2026, a slight increase of one point from the previous quarter and flat compared to the same period in the prior year. TransUnion attributes this stability to consistent balances, a minor uptick in delinquency, and a balanced supply and demand for credit, despite the index being down from its 2023 peak. This data suggests a market that is normalizing, with the emergence of Gen Z as a key growth driver and evolving risk considerations for lenders.
