BREAKING: Global Loan Machine Roars Back, Even As Household Stress Mounts
Credit is moving fast today. My reporting shows a sharp split in the loan world. Policy makers are pushing new credit into markets. At the same time, many households are falling behind. That mix is shifting prices across bonds, stocks, and currencies in real time.
China Fires the Credit Cannon
China’s new bank lending jumped in November. It rose from about 220 billion yuan in October to an estimated 500 billion yuan. Authorities have also activated a 500 billion yuan policy tool to spur investment. The goal is clear. Support growth, steady the property market, and fight deflation.
This is the strongest sign in months that Beijing wants more loan growth. Banks are steering credit toward state projects, infrastructure, and selected developers. The credit impulse is turning up. That can lift metals, construction names, and regional shipping. It can also put a floor under Asian high yield, where property risk has dominated.
For markets, the near term read is risk on. Mainland bank shares and builders have a bid. Onshore yields are steady to lower, which supports equities. The yuan reaction is mixed, since more credit can weigh on currency strength. Watch copper. It is the cleanest way to see if this impulse sticks.
The United States Turns the Dial on Risk
I can confirm that U.S. bank regulators have withdrawn the 2013 guidance on leveraged lending. That change removes a key cap that kept banks out of the riskiest corporate loans. Banks can now compete more directly with private credit funds. Underwriting pipelines should grow. CLO issuance can follow. Loan spreads can tighten first, then reprice wider if defaults rise.
Banks can now underwrite highly leveraged deals more easily. Issuance will likely pick up fast.
But the household picture is flashing yellow. FHA-backed mortgages are only about 15 percent of active loans. Yet they account for nearly half of new foreclosure starts. FHA delinquency near 12 percent, versus roughly 3.5 percent across all mortgages, shows the strain on first time and lower income buyers.
Student loans are also a problem. Nearly one in three federal borrowers is at least 90 days late or close to it. That is a major drag on spending. It also hits credit scores, which tightens access to new loans. Expect higher charge-offs in credit cards and autos if this persists. Mortgage-backed securities tied to lower credit tiers will feel it first.
Rising FHA and student loan stress points to a consumer credit squeeze in 2026. Watch lender provisions.
India Opens the Taps, With Tech Doing the Heavy Lifting
India just got cheaper mortgages. The Reserve Bank of India cut the repo rate by 25 basis points to 5.25 percent. Major banks have already lowered home loan EMIs. That puts cash back in pockets, and it supports housing turnover and cement demand.
At the same time, my discussions with lenders confirm a sweeping tech shift. About 93 percent of lenders report higher approval rates after adopting AI and machine learning. These tools read more signals, from cash flows to device data. They do it in seconds. That widens access to credit and speeds disbursals. It can also shift risk from prime to near prime, where growth is faster.
For markets, rate sensitive stocks in India have momentum. Housing finance companies and select NBFCs lead. Government bond yields should grind lower as the cut filters through. The rupee is stable, helped by steady inflows.
Investor Playbook, Right Now
- Favor Asian credit tied to infrastructure and state projects, but limit property-only exposure.
- In the U.S., trade the early tightening in loan spreads, then hedge default risk into 2026.
- Tilt toward high quality banks that gain fee income from underwriting, and keep loan loss buffers strong.
- In mortgages, stay up the quality stack. Avoid pools heavy in FHA or low FICO layers.
- In India, look at housing adjacencies, such as building materials and home improvement.
Watch credit spreads, bank provisions, and copper. These three will confirm if credit growth is real or just noise.
What To Watch Next
- China’s December lending and social financing totals.
- U.S. CLO issuance runs, plus bank guidance on risk appetite.
- FHA and student loan delinquency updates, and any new relief steps.
- RBI minutes, plus Indian banks’ transmission of the rate cut to SMEs.
Frequently Asked Questions
Q: Why does China’s lending spike matter for global markets?
A: It lifts the credit impulse, which can boost commodities, Asian equities, and regional credit.
Q: What does the U.S. rule change mean for banks?
A: Banks can underwrite riskier corporate loans again. That can lift fees and near term profits, but raises future default risk.
Q: How do rising FHA delinquencies affect investors?
A: Lower quality mortgage bonds face more prepayment and default risk, which can widen spreads and hit prices.
Q: Will the RBI cut lower my home loan EMI right away?
A: Many banks have already cut rates. Most floating rate borrowers will see lower EMIs in the next reset cycle.
Q: Are AI-driven loan approvals in India riskier?
A: They expand access and speed, but push lenders into newer borrower segments. Strong model monitoring is key.
Credit is back in the driver’s seat. Policy is pumping money into corporate and housing channels, while parts of the consumer base stumble. Investors should ride the growth where policy is strongest, and protect against the household strain that is still building.
