There may be trouble ahead

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The FT reported today that:

More than a million US consumers have fallen at least two months behind on car loan repayments as the delinquency rate reaches its highest level since 2009, in the latest sign of stress in the $1.1tn market.

And

Delinquencies on credit cards also rose by about the same amount over the period to 1.79 per cent – the highest since 2011.

The rise in bad loans comes despite persistently low borrowing costs and unemployment levels – suggesting lenders may be letting consumers take on bigger debt burdens than they can handle. Lending to consumers with weak credit scores has been one of the fastest growing parts of the industry.

On top of record stock market highs this is all bad news. Interest rates are bound to rise soon: then this bubble really bursts.


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