Friday, Mar 23, 2007
UK sub-prime lender feeling the pinch
BBC News: Sub-prime lender's profit warning
It would appear that the sub-prime mortgage business here in the UK may be starting to have problems.
Posted by wedgels @ 02:57 PM (187 views) Add Comment
11 Comments
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1. royston said...
Finally!!!!!!!!!!!!!!!!!!!!!!!
Now all we need is some good stories about ropey practices to grab a few headlines and shake the confidence of mortgage bond investors and - bingo! - credit lines dry up and house price can correct.
It still irritates me that commentators can still depict the 'subprime problem' as an isolated disease rather than what it is - a symptom of the biggest credit blowout and asset price distortion in history.
2. Watch This Space - Help!!! said...
At last!!! are we seeing the begining of the end or the end of the begining?
3. paul said...
And so the rot spreads ...
4. Sam said...
this is intresting. here and in the US they managed to cause this without really increasing unemployment. but I guess that's to follow.
5. Sitting Tight said...
Interestingly, 0% credit cards are getting much harder to come by. When you do get one you find that your credit limit is pathetic. I put it (low limits) to one card provider that this was due to the 0% offer but they denied it and told me to ring back in 6 months to increase my limit - just as my 0% deal runs out!! Credit tightening up!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Wont be too much longer.
6. denzil said...
Highly significant!
Like to see a bit more on the reasons why this outfit is going tits up and also intrigued to see who is next.
You have to laugh at this whole sub-prime business. I love the way "sub-prime" is the new term for "exceptionally high risk loan". Completely bonkers lending practises.
7. enuii said...
I like the bit '9.8% of its borrowers were more than 90 days behind with their payments', which just about sums how ropey their lending practises are.
8. Uncle Tom said...
In a world full of bubbles, one needs to look for pins - and this might just be one...
Indeed, it might only need one pin to implode this house of cards.
But, having got to grips with the causes of the US subprime crisis, three important questions arise:
1) Are the UK subprime lenders signed up to the same financing contracts as the US ones?
2) Are the easy credit brigade also vulnerable?
3) When does a BTL mortgage become subprime?
Whatever the answers, this is a very interesting development.
Tom
9. Whiteknight said...
I will just post this one last time as it got swamped in post timing. Really.. this is what needs to happen immediately and in light of the above:
Again....
1. People "in charge" of organisations who lend recklessly today to earn income which boosts profits today at the expense of the stability of their institutions tomorrow need to be reminded that:
a] Any bonuses they earn on record earnings currently will be pursued when they are charged with negligence and worse.
b] They could serve jail sentences.
c] Having collected their winnings and left the organisation will not get them far enough away.
d] People will still remember who was running each institution prior to a merger. There are such things as computers and databases that keep these things linked.
2. Regulators and committees responsible for banking system stability need to know that we will also remember who was on watch at the time of the debacle. Disasters dont happen over night. They will not be allowed to melt away into the background.
3. Regulators and committees responsible for banking system stability need to issue open letters to the Boards and management teams of all banks reminding them their responsibilities. IMHO a reminder of PERSONAL responsibility and liability does wonders .. institutional reminders do not.
4. In stronger conclusion to its last report, the regulators need to say outright that self-certified based lending is not acceptable. They are the regulator after all. Some namby pamby statement about it being "questionnable" or "inadvisable" is not good enough.
5. Under-achieving, under-talented politicians who would put their own careers and power ahead of the next 20-30 years of the countries prosperity need to be held to account and ignored. They should not be allowed to stick in their ivory towers talking about everything being OK whilst it is far from OK.
6. Those who are listened to in the markets need to stop thinking they talk this one down. They can't. Every passing moment counts. IMHO its too late anyway. Far too late. But still every passing moment counts because there is a small finite probability it is not. Turn off the supply of over cheap money now. It was tried. We couldn't gain control of foreign resources we had our eye on to bail us out. People make mistakes. Move on - accept the consequences. Once everybody is dealing with the consequences we are at least moving forward.
10. geed said...
What! The UK has a sub-prime market and its in trouble! But dont worry what happens in the US bears no relation to what happens in the UK.
11. sovietuk said...
Just think, three teeny weeny quarter point rises and a business/whole industry looks to be in trouble. UK isn't on a knife edge, course not.!!!!!!!!!