Posted on 09/06/2023 8:29:39 AM PDT by Kaiser8408a
Thanks to Bidenomics, code for massive Federal spending on green energy initiatives and payoffs fo large donors, we have agonizing inflation and consumers are borrowing more and more to cope with inflation. And with the increased use of debt comes …. drumroll … delinquenices!
Let’s start with mortgage loans, the overall delinquency rate is 63bps, near record lows, likely due to the huge home appreciation of the last few years which padded the equity cushion for most homeowners. Even the youngest cohort (18-29 years old) has a delinquency rate only 30bps higher than the aggregate. Unlike the 2007-2011 period, the credit cycle is not playing out in the real estate market.
The US conforming mortgage rate is UP 158% under Bidenomics.
Let’s move on to some forms of consumer loans, where the story is a little more daunting.
Auto loans are definitely the epicenter of the credit cycle. While the overall average is a still somewhat tame 2.41%, younger borrowers are not keeping up. Younger borrowers have delinquency rates that are 1-2% higher than the average while the inverse is true for older borrowers. Eighteen-to-thirty-nine year-old borrowers have the highest delinquency rate in 13 years.
Somehow, I sense that used car lots are going to start filling up again as these vehicles get repossessed. This should put downward pressure on used car prices, bringing that element of inflation down. This is one of the channels through which monetary policy works.
(Excerpt) Read more at confoundedinterest.net ...
The current mortgage rates are quite fair considering inflation.
The mortgage rates were artificially low under Trump’s last years because of Covid money creation.
We know how to get lower mortgage rates:
“Warren Buffett...constitutional amendment...any time there is a deficit of more than 3 percent of the Gross Domestic Product, all sitting members of Congress will be ineligible for re-election”
You’re buying more than a house, you’re also buying votes for Democrats.
Multiple jenga towers on pace for total collapse. Cars, commercial and residential real-estate, multiple credit card consumer debt. Default, default, default.
Bfl
On a busines news segment thins morning they were talking about a report out from the Federal Reserve Bank at San Francisco, with a study they did that projected the effects of the Fed’s rate increases will take a decade at least before they are no longer influencing financial decisions.
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