- The share of consumers who expect to default on loans is up a full five percentage points since September, according to UBS. The profile may not be what is commonly expected: They tend to be middle and upper income, younger, male, urban, and living in coastal regions.
- They also are likely to have a higher rate of home ownership than peers, but lower home equity, greater use of adjustable and interest-only loans, and higher non-mortgage related debt.
- And what is the most common reason they think they'll default? Nothing specific is by far the most common answer.
- Trying to explain, UBS says this is consistent with the thesis that defaulting carries with it less stigma since the financial crisis.
- Unfortunately for retailers, the group most likely to default is also the group most likely to buy big-ticket items. UBS suggests buying CDS on high-yield indices, and avoiding auto lenders, credit-card companies, and fintech lenders.
- Among interested parties: ALLY, SC, SYF, COF, LC
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