Auto Bubble Burst Begins As Subprime Delinquencies Soar To 2009 Levels
// Zero Hedge
For months we've argued that record auto sales have been propped up by low interest rates, a perpetual loosening of auto lending standards with terms being stretched to the max and a wave of leases, all of which have allowed the American consumer to trade up to more expensive vehicles while maintaining low monthly payments.
That said, with rates recently on the rise and a flood of lease returns driving down used cars prices (see "Record High Lease Returns Set To Wreak Havoc On Used Car Prices"), the tailwinds that have propelling auto sales to record highs over the past several months look set to change course.
Certainly, a quick look at the 61+ day delinquencies in General Motors' subprime securitization book would seem support our rather negative thesis on future auto sales with January 2017 delinquency rates soaring to the highest levels since late 2009 / early 2010.
Meanwhile, looking at GM's subprime data ....