HELOC Study

A new TransUnion study identified a framework for managing home equity lines of credit (HELOC) risk. The study determined that up to $79B of $474B in HELOCs may be at an elevated risk of default.

Heloc Balances

“The financial shock associated with a HELOC payment increasing to cover both principal and interest can cause liquidity issues for some borrowers; this dynamic is driving significant concern in the lending marketplace. The TransUnion study indicated that up to $79 billion of those HELOC balances could be at elevated risk of default in the next few years. Though significant in dollar terms, the study isolated the risk to fewer than 20% of balances.”

–Steve Chaouki, head of financial services at TransUnion

Heloc Balances

“The financial shock associated with a HELOC payment increasing to cover both principal and interest can cause liquidity issues for some borrowers; this dynamic is driving significant concern in the lending marketplace. The TransUnion study indicated that up to $79 billion of those HELOC balances could be at elevated risk of default in the next few years. Though significant in dollar terms, the study isolated the risk to fewer than 20% of balances.”

–Steve Chaouki, head of financial services at TransUnion

Heloc Payment Shock example
Heloc Payment Shock example

“The vast majority of the nearly 16 million consumers with a HELOC carry other forms of debt as well. Our study allows lenders across portfolios to better identify, anticipate and measure how an upcoming payment shock for a HELOC borrower might impact that borrower’s ability to repay not just the HELOC, but also his credit card, auto loan and other debt obligations. In other words, we’ve provided a framework for effectively managing that risk.”

– Ezra Becker, co-author of the study and vice president of research and consulting at TransUnion

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