The WSJ hits on a somewhat tired theme today — the fact that the housing crisis has moved from being a subprime problem to a prime problem. This is what happens when you’re at the end of the Summer, and there’s little going on out there.
Nevertheless, we did find one interesting fact in there
WSJ: HSBC Holdings PLC, which was one of the first banks hit by a wave of subprime defaults in the U.S., says its portfolio of prime credit-card loans is performing worse than its subprime group. One reason for the switch, the bank has said, is that many of its subprime borrowers are renters, who have demonstrated a better payment history on their credit cards than prime borrowers, who are homeowners now getting hit by falling house prices.
The focus on prime borrowers comes more than two years after the housing meltdown took its first aim at subprime borrowers, who found themselves locked into unaffordable mortgages and weighed down by credit-card debt.
These subprime borrowers tend to have fewer financial levers to pull to stay current on their debt payments, so they default relatively quickly. Many of those bad subprime mortgages have worked their way through the financial system, causing billions of dollars in losses to the nation’s banks. Credit-card issuers, meanwhile, have been quick to cut off these subprime borrowers, who were in the first wave of delinquencies and defaults.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.