By: Free world Economic Report
What could go wrong? Despite the fed’s rosy picture on job growth and the economy, credit rating agencies like Fitch and Moody’s paint a whole different picture.
According to the Business Insider:
The 60+ day delinquency rate for subprime is at the highest in at least seven years, according to Fitch.
Previously, Steven Ricchiuto, Mizuho’s chief US economist, highlighted a jump in losses on subprime auto loans, moving to 9.1% in January, up from 7.9% in January 2016.
“The data suggest some notable deterioration in the performance of subprime auto loans. This translates into a large number of households, with roughly six million individuals at least ninety days late on their auto loan payments.”
While subprime mortgages were among the first to falter when the U.S. housing market fell apart a few years ago, car loans are a different matter. Even though they may have been less than diligent when it came to looking after their mortgages, most borrowers continued to make their car payments – largely because they needed their vehicles to get to work.
Of course the banks will never take responsibility themselves and blame it on independent auto loan companies eager for business. The delinquency rate is at a seven year high with six million consumers late on their payments. This is a disaster. Many of these loans are given to buyers who have poor credit scores, who are often mislead by interest rates and terms by the lender. Most banks consider a score of less than 620 to be subprime territory.
Auto loans have surpassed a trillion dollars and is climbing rapidly. The banks and lenders will look for any scapegoat as how this is getting out of hand.
It’s just not easy credit alone that’s causing all this. The debt based currency system is also to blame. Consumers no longer have purchasing power as the Fed Reserve continues to prop up the US dollar with CEO’s buying up their own stocks. Before Donald Trump, the manufacturing sector had taken a huge beating with factories closing, most notably the auto industry, with outsourcing.
With the higher costs of living and stagnate wages, this problem can only persist.