Personal Finance

3819 readers

1 users here now

Learn about budgeting, saving, getting out of debt, credit, investing, and retirement planning. Join our community, read the PF Wiki, and get on top of your finances!

Note: This community is not region centric, so if you are posting anything specific to a certain region, kindly specify that in the title (something like [USA], [EU], [AUS] etc.)

founded 1 year ago

MODERATORS

[email protected]

Car Repossessions Surge 23% as Americans Fall Behind on Payments (www.bloomberg.com)

submitted 3 months ago by [email protected] to c/[email protected]

37 comments fedilink hide all child comments

Paywall removed https://archive.is/NFELy

you are viewing a single comment's thread
view the rest of the comments

[–] [email protected] 0 points 3 months ago

The home foreclosure rate is way below where we were at around 2008. It is trending up, but slowly. Consumer debt is high, but debt to income is in a pretty consistent range.

The problem with 2008 wasn't high foreclosure rates (that was just the trigger), it's that the foreclosure risk wasn't properly baked into lending rates. So banks thought they had less risk than they did, and that was due to greed (i.e. banks selling loans in buckets that masked the risk). Since then there have been a lot of changes in how risk is managed, so I highly doubt we'll see a similar cascading failure. We may see higher foreclosure rates due to high borrowing rate shock, but that shouldn't translate to a recession, it would just hurt bank profits in the short term. At least that's the theory.

So if banks don't start failing, we shouldn't see a big disruption to employment, therefore no major recession. At least that's my take.

As for anecdotes, most of the people I know aren't in crazy debt. Looking around the neighborhood generally doesn't match what's going on more broadly.