Nearly One Million Canadians May Struggle When Interest Rates Rise - Seite 2

"The size of the monthly payment shock is only one side of the equation," said Wang. "For some, a $50 increase in their obligations may simply be managed by forsaking a couple of restaurant dinners and eating at home, while for some others, this may mean they would not be able to fill their gas tanks to get to work. So we need the other side of the equation: comparing the payment shock with consumers' available cash flow."

Trended credit data now available on TransUnion's CreditVision consumer credit report provide an accurate assessment of consumers' available cash flow and capacity to absorb increased payment amounts based on historical payment amounts. These insights revealed that, with a ¼-point interest rate increase, 718,000 consumers might not be able to absorb the ensuing payment shock. An additional 253,000 consumers might not be able to absorb the shock if the rate were to rise by a full percentage point.

Among these at-risk consumers, more than 650,000 currently have credit scores that put them into prime or better risk segments -- those segments that are generally considered to be low risk.

Number of Consumers (in Thousands) Whose Cash Flows
May Not Be Enough to Offset a Payment Shock
Risk Segment (Score†)		¼-point interest rate increase		1-point interest rate increase
Super Prime (830 - 899)		239		298
Prime Plus (780 - 829)		112		163
Prime (700 - 779)		134		193
Near Prime (600 - 699)		132		184
Subprime (300 - 599)		101		133
Total		718		971
† TransUnion proprietary risk score

"This is especially compelling news for lenders, as hundreds of thousands of borrowers traditionally believed to be low-risk consumers may suddenly become risky," said Wang. "While lenders expect subprime consumers to be risky, this sudden change in prime or better segments may come as an unpleasant surprise. Based on this study, we recommend lenders evaluate their own portfolios in a similar manner to determine who might be vulnerable to a payment shock among their customers, and work with those customers to ensure their accounts remain in good standing. This is a key point of the study -- to understand and measure the size and magnitude of the potential impact­ -- so that both consumers and lenders can be better prepared."