Tuesday, Sep 25, 2007
UK Subprime market "higher than official estimates"
Economist: The Global Economy (Briefing)
Great article from The Economist about the knife-edge state of the global economy. It makes the point that the UK economy has been growing on the same faultlines as the US economy: an overvalued housing market, high consumer debt and a massive trade deficit. And the sub-prime market - estimated at 10% - is likely to be more like 25% when one takes liar loans into consideration.
Posted by slappyrick @ 01:51 PM (356 views) Add Comment
2 Comments
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1. alan said...
Bear Stearns has ben desparately trying to play down the problems.
Unfortunately, 450,000 people (say Credit Suisse) will have their IRs increased in the next 3 months. This has nothing to do with US IRs, but everything to do with the "step up" loans which increase during the contracts. Some of the videos I've seen raise the rates from 4.5% to 12% in one jump. People can't afford the increases and homes get reposessed.
See earlier posts today as to which bank is stuck with the duff loans built in CDOs.
2. Happy Renter said...
You bet it's higher
I overheard a conversation between three Northern Rock 'salespeople' on the train today. They were bragging about who had given the greatest salary multiple (top was 9x), and saying that brokers seemeed to be constantly surprised by what they could offer "didn't realise you could do that" - one said she was thinking of getting it on her voicemail so she didn't have to keep repeating it.....
...and to think what they'll probably be repeating next - "would you like fries with that?"
They also felt the definition of sub-prime didn't include their lending practices, but wondered why they'd not yet been asked to tighten up their criteria...............