Our analysis of Reuters reporting (Aug. 25, 2025)
Recent reporting from Reuters highlights a troubling trend in consumer finance: even the most creditworthy borrowers are beginning to fall behind on debt repayments. According to VantageScore, late repayments over 90 days rose 109% year-over-year among “superprime” borrowers (credit scores between 781–850) and 47% among prime borrowers (scores 661–780).
While these groups typically represent the most financially secure households, the data suggests that financial pressures are becoming more widespread. As VantageScore chief economist Rikard Bandebo told Reuters:
“Even though in absolute terms the increase is modest, it shows that even consumers considered the most credit-healthy are also beginning to see some stress with regard to repayments.”
Signs of Stress Across the Consumer Landscape
The Reuters piece also noted:
- A marked uptick in late-stage delinquencies on auto loans and mortgages.
- Slowing new originations in both categories.
- Shifts in consumer behavior, with more affluent households shopping at Walmart, reflecting price sensitivity amid ongoing tariff concerns.
- A softening in consumer sentiment as households brace for higher prices.
Defaults on secured loans like mortgages, Bandebo noted, generally occur only when “the pressure on finances is too much for the consumer to manage.”
Our Perspective
At Moran Wealth Management®, we view these developments as important early signals:
- Stress is broadening — When prime and superprime borrowers falter, it suggests that financial strain is not limited to traditionally at-risk households.
- Credit health and spending are linked — Rising delinquencies, coupled with slowing new loan activity, could dampen consumer spending in the second half of the year.
- Tariff-driven inflation matters — Household concerns about rising prices reinforce the delicate balance between income, debt service, and consumption.
Why We’re Watching Closely
Consumer credit health is one of the clearest indicators of broader economic momentum. With household spending driving roughly two-thirds of U.S. GDP, even modest shifts in repayment behavior can signal larger economic consequences ahead.
For our clients, this does not necessarily mean imminent risk — but it does reinforce the need for prudent portfolio positioning. We continue to monitor leading indicators like consumer credit, loan originations, and retail spending habits to inform our investment outlook.
Bottom Line: While banks continue to say consumers remain “in good shape,” the data suggests caution is warranted. Our disciplined, research-driven approach ensures your portfolio is prepared for these shifts.
For more timely updates and market perspectives, visit our Insights page.
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