Tuesday, Mar 06, 2007
Sub prime lending in the UK
FT.com: Lenders open doors to blemished credit scores
"Borrowers with less-than-perfect credit ratings are muscling in on the buy-to-let market as lenders become more willing to accommodate those who have previously defaulted on loans.............."
Posted by kagiso @ 10:14 PM (969 views) Add Comment
3 Comments
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1. dohousescrashinthewoods said...
I can see the logic of allowing people with only minor credit problems to be approved for loans, but there are a few warning signs:
- If Edeus wrote £1bn of business in the first two months, there will be strong temptation to lower standards and bring in more business (read risk).
- Mortgage-backed securities (MBS) are less liked than they were, given recent losses.
- There appears to be a global credit crunch
- The sub-prime melt-down in the US which is set to go mental Q3/Q4
- The fact that new BTL is struggling to break even, given IRs and house prices, combined with the premium on these loans, suggests it will not be a positive earner. Even uber-bulls are forecasting a slowdown in capital appreciation, so there is not likely to be any gain there. This is bad for the borrower, which is bad news for the lender.
Given these factors, it seems likely that this will end in tears - and quickly. Another billion in the next couple of months, followed by a colossal global financial and property meltdown spells "doom". I'd like to watch Edeus' share price..
2. bidin'matime said...
"Jonathan Cornell, technical director at Hamptons Mortgages, says: “Just because someone has had problems in the past does not necessarily mean they should be denied access to buy-to-let forever.”
Good god, so it's a basic human right now, is it??!!
3. waitingfor hpc said...
just plain stupid