Canadian consumers continued to spend on credit in the first three months of 2017, bringing the average non-mortgage debt across the country to $21,696, up 1.9 per cent annually.

At the same time, the national 90-day delinquency rate for non-mortgage credit accounts fell 1.45 per cent on an annual basis, to 2.72 per cent.

Delinquency rates saw the largest annual declines in Toronto (down 7.55 per cent), Winnipeg (down 3.9 per cent) and Montreal (down 2.51 per cent). Overall debt loads increased in all three of those cities, and others, even as delinquency rates declined.

"While delinquency rates for subprime borrowers generally are much higher than other risk groups, it's a positive sign to see delinquencies decline even as more consumers in this risk group gain access to credit," said Matt Fabian, director of research and consulting at TransUnion Canada, which put out the report Thursday morning.

'People are treading water'

Declining delinquency rates may simply reflect the increasing amount of personal debt, said Scott Hannah, chief executive of the non-profit Credit Counselling Society.

"So while the delinquency has gone down, people are taking on more debt, which means they can offset their living expenses with additional credit, so they're able to maintain their minimum payments," he said

TransUnion's recent reports, Hannah pointed out, show consistent annual increases in average Canadian debt levels.

"So while the report here says that people are managing OK, I think that a more accurate description is that people are treading water, because debt levels are continuing to rise."

In September 2016, TransUnion warned that nearly one million Canadians would be in financial trouble if the interest rate on their total debts, including mortgages, increased by as little as one percentage point.

The increasing popularity of auto loans among Canadian consumers is a worrying sign to one expert on personal debt. (CBC)

Delinquency rates were up 6.64 per cent for the year in Calgary, 4.84 per cent in Edmonton, and 2.34 per cent in Regina. Debt loads increased slightly in the first two cities, while they declined in Regina.

"I think it's really interesting that the delinquency rate has actually dropped," said Elena Jara, director of education with non-profit credit counseling service Credit Canada Debt Solutions Inc.

Jara said she's seen a significant improvement in financial literacy since the 2008 financial crisis, and credited increased media awareness and better education by governments and credit counseling services.

Growth in subprime credit cards, auto loans

At the end of the first quarter of 2017, 20.4 million Canadian consumers were carrying a credit card balance, a 3.5 per cent increase from the first quarter of 2015.

Subprime borrowers in particular have signed up for lots of new credit cards in the past two years, with 14 per cent more gaining access to a card between the first quarter of 2015 and the first quarter of 2017.

"Serious delinquency rates" for subprime borrowers fell 9.4 per cent over the same time period. (TransUnion defines "serious delinquency rates" as accounts that are past due by two months or more.)

The credit information company says 2.5 million Canadian borrowers considered subprime now have access to credit cards.

"We have been seeing that a lot of subprime borrowers have been acquiring credit, and the reason we see that is mainly because it's become a lot easier to get credit lately," said Elena Jara of Credit Canada Debt Solutions.

"I think the lenders have eased up on the availability of credit to the high-risk consumers because they feel that the economy is doing well."

The $21,696 average non-mortgage debt in the first quarter of 2017 breaks down across four categories:

Auto loans: $20,141 (up 2.67 per cent annually).

Credit cards: $3,904 (up 2.23 per cent annually).

Instalment loans: $24,795 (up 5.46 per cent annually).

Lines of credit: $29,793 (down 1.81 per cent annually).

"I find it concerning when I see that the largest growth was in auto instalment loans," said Scott Hannah of the Credit Counselling Society.

"Many of those instalment loans have incentives for people to take out a loan [and make] a very low payment over an extended period of time, upwards of seven years," he said.

"Those same individuals will find themselves underwater after about a year, when the depreciation on the value of that vehicle has declined faster than the amount of the loan."