Car sales have hit record levels in America, helped by record lending, says Serena Ng in The Wall Street Journal. The total volume of American car loans has hit a new peak around $1trn. And where there's record lending, as we learnt in 2007, there is often careless lending.
As with subprime mortgages, car loans are often bundled and sliced and diced into new securities. "Bonds backed by auto loans made to riskier borrowers [have] proved to be a sweet spot for yield-seeking investors" in today's low-rate environment, says Bloomberg.com's Tracy Alloway.
But it now seems "the chickens [are] coming home to roost". Credit-ratings agency Fitch says that delinquencies have hit a 20-year high; 5.2% of borrowers are over 60 days late.
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Analysts have dismissed fears of a subprime car loans bubble bursting because the economy is strong but then subprime mortgages started to weaken before growth turned down.
Subprime car-loan-backed bonds are only worth $27bn in total, and may not pose a systemic threat, but the sector has produced a nasty blast from the past.
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SIPP holders to get cash warnings and be offered default fundsNews Providers will be required to offer investors a default fund and must warn customers of the inflationary risk of cash savings the regulator has said. What the new rules mean for your retirement pot?
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Zoopla: Asking price discounts hit a five-year high – is now the time to buy a property?
News Zoopla’s October House Price Index shows sellers are accepting discounts of 5.5% on average to secure a sale – we reveal where homeowners are taking the biggest asking price cuts
