Tuesday, April 22, 2008
Bradford & Bingley in the doo-doo
B&B is the market leader in Buy-to-Let mortgages which offer customers 100-1000% gearing into a declining asset class where none of the risks of leverage have been explained. BTL also offers investors a huge negative carry trade with average net property yields in the UK being 3.75% and mortgage finance now coming at almost double that. Self Certified mortgages (liar loans as the Americans appropriately call them) where B&B takes no income verification at all are at best going to see the income of the borrower be at its weakest when the collateral value is at its weakest as overtime and bonuses diminish with a weakening economy.