Thursday, Jun 29, 2006

Junk mortgages

Firstrung: Sub prime market best described as "junk"?

If a company has a bad credit record with a significant chance of defaulting on its debts, then its debt is described as "junk". But if an individual is seen as a poor credit risk, the loans they are offered are described as "sub-prime". No doubt lenders would have a tougher time selling "junk mortgages" than the rather less judgemental-sounding "sub-prime" loans.

Posted by Converted Lurker @ 11:54 AM (2904 views)
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1. Time To Raise Petrol Prices said...

This is very interesting - the total sub-prime market was worth substnatially more than the BTL one last year. That suggests that although BTL may be propping up the market at the bottom end, the level of debt management in the UK is likely very poor and getting worse. Not only this, but sub prime mortgages have truly awful reversionary rates when the discount period ends (LIBOR + 4% in some cases!) - couple that with rising interest rates, and it's an absolute recipe for disaster.

Thursday, June 29, 2006 12:24PM Report Comment
 

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