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Banks Cut Off Credit & Prepare For Loan Losses As Demand Collapses, Auto Loan Demand Hits Record Low

Published on Thu, Aug 6th 2020 People & Blogs Rectangular HD

The bad news is the US economy runs on credit, the worse news is the banks have begun to cut us off. Banks have tightened lending standards at near record pace. In fact, there are only a few times in US history where banks have been less willing to lend. The other disturbing trend has been the near record loan loss provisions it's clear the big banks have been preparing for a rush of loans turning sour due to the near record pace of unemployment we've seen so far in the United States. honestly everything in this nation runs on credit and the banks are beginning to limit Credit especially for those that are in the lower income brackets. There's also reports that people have been seeing their credit limits lowered even though they haven't even missed a payment. It began with JPMorgan they initially raise the bar by making sure those that were applying for a mortgage had at least a 700 credit score they also wanted a down payment that was 20% of the homes value. the next step after that was cutting off all loans that essentially are not backed by the government like the paycheck protection loans. the only reason that Banks would begin cutting off credit is did they anticipate people will not be able to pay their loans as we seen a huge rise in delinquencies and defaults, or they believe the value of the collateral that is used to back these loans is going to drop in value. the banks are currently preparing for an all-out economic collapse because that's exactly what is happening. The interesting dynamic in all of this would be the collapse and mon demand because recently they have been suggesting that we're on the edge of this big v-shaped recovery however we see that we just had record low auto loan demand and the most recent data was from July. mortgage demand has dropped in just about every segment and banks have been tightening lending standards on just about the entire mortgage Market. now it's possible at some point we have recovery but one thing is certain we are not in a V shape recovery if loan demand is falling and banks are beginning to cut off credit for the poor. they are boarding up the windows and preparing as if the storm is rapidly approaching because it is of course.