Banking-sector troubles could make it more difficult for some consumers to obtain loans to buy homes, cars and other big-ticket items
To the extent banks are “having difficulty getting deposits, they’re going to have to cut back on lending, which they’ve already started to do,” said Jack Ablin, a founding partner of wealth-management company Cresset Wealth Advisors LLC. “Someone who wants to refinance a mortgage, or buy a boat, or fund a kitchen remodel—they’re going to have a more difficult time.”
In 2022, around 80% of new-car transactions and about 40% of used-car deals involved financing, according to credit-reporting firm Experian. More than half of that financing came from banks and credit unions, while another quarter came from auto maker subsidiaries such as Honda Financial Services or Ford Credit.
Some would-be home buyers are hesitating, in part because they are concerned about the values of their stock portfolios.The staying power of personal spending has been propped up by a three-legged stool over the past several months, said Tim Quinlan, an economist at Wells Fargo. Consumers have drawn down excess savings, benefited from incomes outpacing inflationWith credit increasingly limited, the health of the economy could depend on two of the three legs being sufficient. Mr.
But it isn’t only the credit crunch that could cause consumers to delay big purchases, said Steven Blitz, chief U.S. economist at TS Lombard. It is also a loss of confidence and a reluctance to take a financial leap when the landing spot is a moving target. Consumers uncertain about their personal finances or the broader state of the economy might reconsider whether waiting on a major financial decision might be the more prudent move at the moment, he said. Mr. Blitz said many consumers are asking, “Am I going to go now and take out a first mortgage and buy a house?”Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved.
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