GM Cites Mortgages for Loss

General Motors is citing the fall in mortgages for the reduction of auto sales and auto loans. GM says that they are now looking at a $115 million loss from their interests in the mortgage lending business, and this in turn is affecting their bottom line.

The company says that auto sales is weakening real estate prices, since many people use real estate equity to pay for cars instead of opening separate car loans. The company says that they are down about 90% from where they were a year before.

With the housing market starting to dump excess inventory, this could mean good news for the auto industry – because they are looking at high inventories right now. They will find that more and more people will be looking to purchase smaller cars, as luxury cars will be too high to purchase.

The auto loan industry is feeling the pinch as well, as people are not only buying less cars, but as they start getting into trouble in the housing industry, more and more of them will begin defaulting on their car loans in order to keep their mortgages current.

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