In what is a very troubling sign for the nation’s economy, the default rate for subprime auto loans increased to 12.3 percent in January. This is a full percentage point increase over the prior month and an even greater increase over the prior year.
The default rate is now the highest rate since early 2010. This is extremely significant because billions of dollars have been gobbled up by interest hungry investors who are using securitized subprime auto loan securitization packages as an investment tool in a similar manner to what was done with home mortgages prior to the housing boom crisis which precipitated the Great Recession.
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