Rising inflation and interest rates are becoming a dangerous cocktail for thousands of cclients in the Colombian financial system that they could face problems with their credits in the coming months.
An investigation carried out by the TransUnion credit bureau found that the real disposable income of Colombians and the capacity to pay off your debt obligations They are probably under increasing pressure as the combination of the two factors mentioned creates a possible payment shock effect.
(Read: Gasoline prices in the country have risen $530 since January).
The firm says this comes in the context of a recovering job market that has so far been effective in helping Colombians weather economic pressures, but where household savings have been declining since the second quarter of 2021.
TransUnion says that as inflation rises, consumers have less disposable income, and the impact of the reduction is compounded by higher cost of debt service while monthly payments increase of its variable rate products and those indexed to inflation.
And it ensures that all consumers with credit are exposed to a payment shock caused by inflation, but those who have credit cards and home loans indexed in their wallets they are also exposed to cost of debt shocks, as monthly payments increase with interest rates and inflation increases.
The TransUnion study mentions that increases in household spending on basic necessities could negatively impact disposable income and increase the financial stress of consumers, with an essential component such as the price of food that has increased 27% year against year in September 2022.
The firm says that according to calculations based on Dane data, households experienced an average monthly increase of $44,488 in your total spending from December 2021 to September 2022.
The study found that the 25% of Colombian consumers with credit would probably not be able to absorb an inflationary increase of $20,000 in their monthly expenses. Similarly, 30% of consumers would probably not be able to absorb an inflationary increase of $50,000 per month, while 36% and 42% would face the same difficulty if they experienced an inflationary increase of $100,000 and $200,000 pesos in their expenses, respectively.
The study highlights that up to 5.4 million Colombian consumers with credit activity could be affected by the payment impacts derived from the increase in inflation.
TransUnion says that under the likely scenario of $50,000 pesos of monthly spending stress, 3.9 million are expected to be affected, of which 900,000 are already in difficulty (60 days past due or more in one of their credit products), while 3.0 million are at risk and, therefore, vulnerable.
(See: Traders show concern about dollar rally.)
The credit bureau says that 70% of all consumers with credit -8.9 million- are expected to be resilient in this likely scenario and able to handle payment shocks caused by inflation.
The study also revealed that the majority (71%) of consumers identified as vulnerable to the impacts of inflation payments, they are medium and low risk, and 43% are low income.
The study found that 2.3 million consumers are exposed to a rising cost of debt on their cards and/or indexed home loans. Under the likely scenario of a usury rate of 37% and an inflation rate of 11% affecting indexed home loans, approximately 731,000 consumers would be exposedof which more than 500,000 would be vulnerable (those who are already in arrears on a product are excluded) to the possibility of not being able to meet the higher monthly payment.
Around71% of these vulnerable consumers have prime and better risk scoress, and 31% are high-income, implying that the rising cost of debt has far-reaching repercussions and that consumers with a history of good credit behavior may also be at risk.
(Read: Latin America is already feeling the effects of rising interest rates).
BRIEFCASE
