US credit crunch starts to take effect on UK sub-prime market
The recent credit crunch in the sub-prime mortgage market in the United States has dominated the financial news over the past week or two, and it now seems that the effects of the crunch are taking their toll in the UK.
Many bad credit customers have resiged themselves to the fact that they may be unable to get a mortgage to buy a home, at least for some time. Bad credit customers, who have always found getting an affordable mortgage difficult, may now find that the chances of homeownership are even slimmer.
Following the high level of defaults on sub-prime mortgages in the United States, the problems in the sub-prime sector have made their way across the pond to the UK. A number of sub-prime lenders have now announced that they are taking their mortgage ranges off the market, in some cases for just a short space of time and in other cases on a longer term basis. New mortgage products that were due to be launched have been delayed, and a number of other lenders have hiked up interest rates on bad credit mortgages still further.
One broker in the UK spoke about the announcements that have been made by a number of bad credit sub-prime lenders with regards to withdrawing sub-prime mortgages or hiking up rates on these mortgages further, stating that it would be customers with bad credit that would most likely be affected by the changes.
Although in the past those with poor credit have been able to get a mortgage, with the exception of some with bankruptcy proceedings logged against them, brokers and analysts state that this is now likely to change because of the effects arising from the situation in the United States. This could mean problems for those with bad credit, the self employed, and those that need to self certify.
27th August 2007