The poorest Americans are suddenly worried about repaying their debts

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foreclosed home Texas

Reuters/Larry Downing

Family belongings are put out on the curb by a worker after McLennan County Deputy Constables delivered a court order of eviction to a family in Waco, Texas.

A divide is emerging over how Americans feel about their ability to pay down debt.

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Every quarter, UBS surveys about 2,100 US adults on their finances. In the second quarter, the bank found that most people felt confident in their ability to pay their debt, partly owing to a stable jobs market.

"However, the responses from lower income consumers suggest a much more pessimistic outlook ahead," said Matthew Mish, a UBS strategist, in a note on Monday.

"While acknowledging we cannot speak precisely for this cohort, rising anxieties about the future outlook could be clouded by the gridlock in Washington, the latest highly regressive healthcare and tax policy proposals ... anti-immigration rhetoric, and rising financing rates on non-mortgage consumer credit (e.g., auto, credit card loans) amid a backdrop of lackluster wage growth."

The chart below shows that the total population of those surveyed saw lower chances of defaulting on a loan payment in the next year. But only those earning less than $40,000 annually thought they were more likely to miss a payment:

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UBS

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This chart shows that only the sub-$40k income group became more worried about their wages falling over the next six months:

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UBS

And finally, more lower-income households said their salaries matched or were just slightly more than how much they were spending:

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UBS

This income gap also has implications for subprime consumer credit, especially for the booming auto-loan segment. UBS found that delinquencies on car loans granted to people with credit scores around 660 and below were worsening.

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"Given the outlook from lower income consumers conveyed in our survey results, we believe subprime auto default rates will continue to climb," Mish said.