Mastermind Plan for 2025
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Market Warning Signs: What Delinquency Data Tells Us About 2025
As we approach 2025, analyzing current delinquency trends across different debt categories reveals both encouraging signs and potential warning flags for the economy. Let’s break down what the data is telling us.
Student Loans: A Misleading Indicator
The dramatic drop in student loan delinquencies might appear promising at first glance. However, this decline is artificial – a direct result of the COVID-era national forbearance program. This metric currently offers little insight into actual market conditions.
Housing Market Shows Strength
Two key indicators suggest stability in the housing sector:
- Home Equity Performance: Current home equity loans show historically low delinquency rates, potentially supported by record equity levels.
- First Mortgages: Modern loans, both QM and non-QM, are performing exceptionally well compared to pre-2008 standards, thanks to “ability to repay” requirements.
Red Flags in Consumer Debt
Auto Loans: A Concerning Trend
Auto loan delinquencies have reached levels comparable to the 2008 financial crisis and continue to trend upward. This could be our “canary in the coal mine” pointing toward an impending recession.
Credit Card Debt: Approaching Critical Levels
Several alarming factors converge here:
- Record-high debt levels
- Unprecedented interest rates
- 11.13% delinquency rate nearly matching 2008 levels
- Expected holiday season increases
Looking Ahead
The combination of rising auto loan defaults and growing credit card delinquencies mirrors patterns seen before the 2008 crisis. While the housing market appears stable, these consumer debt indicators suggest potential economic turbulence ahead.
Take Action Now
Don’t wait for January to plan for 2025. Carl White is offering loan officers free access to his 1-page Business Plan – a proven tool used by top producers to navigate challenging markets. Access the downloadable guide HERE.
