More U.S. households are struggling financially, especially among lower-income consumers, signaling that a growing number of borrowers could fall behind on their debt, according to UBS.

An above-average percentage of consumers -- 44% -- reported incomes that don’t cover their expenses, or barely cover them, according to a quarterly UBS survey of around 2,100 U.S. respondents. That figure has risen by a percentage point over the last year. And 40% said they had encountered a credit problem like trouble obtaining a credit card or a student loan default, a 3 percentage-point rise from a year ago, the survey said.

Overall consumer credit health doesn’t signal an imminent downturn, according to a UBS indicator that considers the survey plus other data points like unemployment figures, initial jobless claims and the Federal Reserve’s loan officer survey. That indicator stood at 0.1 through the end of the third quarter, but reached 0.7 prior to the 2007 and 2001 recessions. Higher scores are associated with waning consumer health, strategists led by Matthew Mish wrote.

But there are worrying data points in UBS’s latest survey. Just 17% of households reported their financial condition had improved in the last 6 months, down 3 percentage points from a year earlier. Household spending accounts for about 70% of U.S. economic activity as measured by gross domestic product.

“The lower income cohort led the deterioration, suggesting the lower-tier consumer remains under disproportionate pressure,” the analysts wrote.

The potential for consumer credit to get a little weaker supports UBS’s thesis that that U.S. corporate bonds will offer slightly higher risk premiums to investors into the end of the year. The firm forecasts that investment-grade bonds will pay yields that are on average 1.25 percentage points more than Treasuries, compared with current levels of 1.19 percentage points, while junk will pay 4.5 percentage points, compared with Friday’s level of 4.19 percentage points.

Consumers are broadly optimistic about the labor market, with a below-average percentage worried about job losses or reduced earnings in the next six months. Among those surveyed, 26% reported that they plan to buy a home, unchanged from the same time last year and slightly above average.

But respondents said it might be harder to get mortgage credit: 75% expect it will be easy to get a home loan, down 6 percentage points from a year earlier and near the lowest reading since late 2014. Of the people surveyed, 21% said their mortgage loan applications aren’t completely accurate, up 2 percentage points from a year ago, a sign that banks’ credit tightening is “substantial enough to require some consumers to falsify part of their loan application,” the analysts wrote.

As consumers come under pressure, more are falling behind on their debt. The percentage of student loans that are 90 or more days delinquent has risen from a year ago, as have late credit card payments. Auto loan delinquencies are flat, though remain at elevated levels.

“Credit trends in U.S. consumer markets are more worrisome, particularly in unsecured loan markets as the lower-tier consumer comes under further pressure with lending standards tightening, delinquencies rising, and interest rates near peak levels,“ the analysts wrote.

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