Friday, Dec 14, 2007
Skips piling up with sub prime rubbish
Firstrung: Sub prime mortgage availability falls by 64% since July - Moneyfacts
Exclusive Moneyfacts.co.uk research reveals a significant drop in the number of residential sub-prime mortgage deals available, falling by 64% since July this year. If borrowers have overstretched themselves with an unaffordable sub prime deal, worse troubles could lie in store. Even if they can weather the storm and maintain their mortgage payments until their deal expires, getting a new deal may become almost impossible if the current trend continues. With such a reduction in the number of products and lenders taking a considerably more conservative approach, often not lending to those with the most serious debt problems, finding a lender prepared to take on your loan could prove difficult, not to mention that rates have been rising too.
Posted by converted lurker @ 11:20 AM (164 views) Add Comment
1 Comment
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1. Guiriduro said...
The daftest part of "sub-prime" is that its a self-fulfilling prophecy. If you need to get a sub-prime mortgage at a teaser rate (perhaps because of past credit problems, or a high LTV), then the very fact the rate shoots up is the thing which greatly increases the chances of default. That and a completely uncompetitive market for refinancing. Its not that people with a poor credit history are more likely to default if offered a sub-prime mortgage, its that anyone with a sub-prime mortgage is more likely to default in the current market conditions.
I can't see how someone with a previously poor credit history, but who has managed to pay their teaser rate mortgage for 18 months on an asset they clearly don't want to lose, should still be considered sub-prime at the end of that.