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...As high rates persist, more customers are moving their money out of low-interest rate checking and savings accounts and into higher-yielding products like certificates of deposit, Treasuries and money market...
...You see the same thing when you look at savings — the amount of money people have in checking and savings accounts across the income distribution. Look at people who make less than $25,000 a year....
...Moreover, many American debtors are paying fixed rates and won’t get hit by hikes until they need to refinance their loans....
...Moreover, banks are much better positioned than they were in the runups to the Global Financial Crisis and Savings & Loan Crisis....
...But banks are finally having to pass on higher savings rates to depositors, according to JPMorgan and Wells Fargo, which also reported earnings....
...Typically, these borrowers have missed a single loan payment and are unable to make it up....
...Americans have run through their savings and are falling behind on their loans....
...Around a third of this debt pile was originated when rates were rock-bottom in the pandemic, it adds....
...They have been able to charge more for loans because of the interest rates being increased by the Federal Reserve, but they haven’t been passing on these higher savings rates to depositors at the same rate...
...In the US, according to numbers from the Federal Trade Commission, there were nearly 26,000 reported cases of abuse of advance-fee loans last year, costing victims nearly $75mn....
...Then at the end of the third year, the mortgage rate would jump to a market rate, and all the interest which you didn’t pay in the first three years would be added to the balance of the loan....
...In our high-yield business, we generally have experienced about a third of the market’s defaults, and we have outperformed the market in terms of recoveries given default. So credit selection matters....
...Americans’ credit card debts hit $1.08tn in the third quarter, up $154bn year-on-year and the largest jump since 1999, according to the New York Fed....
...The big market-mover yesterday, to our surprise, was not the Federal Reserve....
...First, the rise of fixed-rate loans — and pandemic savings — have stunted the impact of rate rises....
...Last week the US Federal Housing Finance Agency presented its report on the future of the Federal Home Loan Banks....
...A number of banks cut the amount of money they put away for future bad loans, so-called provisions, in the third quarter....
...Authorities said SCB also gave loans worth more than $44bn to Van Thinh Phat and other companies controlled by Lan between 2012 and 2022, accounting for 93 per cent of the total loans disbursed by the bank...
...The result has been record low loss rates on loans by the banks. They have been warning that these savings have been steadily dropping and loan losses rising....
...Growth and employment remain strong — so strong, in fact, that expectations for Federal Reserve interest rate cuts are being pushed further into the future....
...And the February readout will be the first since China lowered its five-year loan prime rate, which is used as the benchmark for mortgages nationwide.Even so, Ting Lu, chief China economist at Nomura, said...
...As a result, average interest coverage — the ratio of earnings to interest expenses — for private credit loans dropped to two times in the third quarter of last year from 3.1 times in the second quarter...
...Credit card delinquency rates are rising, lockdown savings are being drained, and student loan repayments are back, after a three-year pause....
...Against this backdrop, Aozora’s exposure to overseas loans — which account for more than a third of its total — has aroused concern....
...nearly two-thirds funded by corporate saving, derived from operating cash flow running well in excess of capital investment....
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