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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Higher earners face £377 bill if Reeves puts up income tax – do you fit the Treasury’s definition of ‘working people’?Labour’s election manifesto pledged not to raise National Insurance, VAT or income tax but prime minister Keir Starmer appeared reluctant to repeat the promise this week
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Ofgem could write off £500 million of energy debt for 195,000 households – would you be eligible?Energy debt costs the average billpayer on the Ofgem price cap £52 a year.
