Business digest

NATION

GM to build subcompact car in Michigan factory

DETROIT — A person briefed on the decision says General Motors will build its new subcompact car at a factory in Orion Township, Mich.

The person says the automaker is scheduled to announce the move today. The person did not want to be identified because the plan has not been made public. GM spokeswoman Sherrie Childers Arb declined to comment.

The Orion plant was competing with factories in Spring Hill, Tenn., and Janesville, Wis., for the tiny car.

AIG to give government stake in spun-off units

NEW YORK — American International Group Inc. said Thursday it will reduce outstanding federal loans by $25 billion by giving the government a preferred stake in two units that will be spun off from the insurance giant.

AIG is placing two life-insurance subsidiaries — American International Assurance Co. and American Life Insurance Co. — into special purpose vehicles ahead of planned initial public offerings. SPVs are entities sometimes set up ahead of the spinoff or sale of a unit to separate its operations from the parent company.

As part of the plan, the Federal Reserve Bank of New York will receive preferred interests in the SPVs, which will eventually be independent companies once a public offering is completed.

Mortgage rates increase

WASHINGTON — Rates for 30-year home loans edged up this week, remaining above record lows reached over the spring.

The average rate for a 30-year fixed mortgage was 5.42 percent, up from 5.38 percent a week earlier, mortgage company Freddie Mac said Thursday.

The average rate on a 15-year fixed-rate mortgage fell to 4.87 percent, down from 4.89 percent last week, according to Freddie Mac.

Associated Press