(1888PressRelease)
March 20, 2008 - The number of products available in the UK subprime lending market has declined by 71% over the past year, according to research carried out by personal finance advice website Moneyfacts.co.uk. Last March there were some 6,501 subprime products available, and this month the figure has fallen to 1,867.
The subprime market – based on giving credit to higher-risk borrowers and therefore charging a higher rate of interest – has been in the frontline of the fallout from the credit crunch, exacerbated by the huge increase in US lenders defaulting on mortgages as of the latter part of 2007. In the wake of the US subprime crisis, UK lenders are finding it ever more difficult to secure funding from investment banks for subprime products.
In the last week alone, a number of UK organisations have stopped offering subprime mortgages, including Amber Homeloans, Scarborough Specialist Mortgages, and specialist lender Salt. The beleaguered Northern Rock has also said it will no longer offer subprime mortgages funded by Southern Pacific Mortgage.
The rapid decline of the subprime market continues a trend that began in late 2007, according to the Moneyfacts research. The recent spate of products being withdrawn from the market is seen as the second stage in lenders’ tightening, following cuts in the number of their products at the end of last year, as the possibility of a market recovery in the near future looks ever more remote.
Along with all the other measures being taken by mortgage providers and banks – including the increase in personal loan rates, the pulling of fixed-rate and buy-to-let deals, and so on – the loss of such a huge chunk of the subprime product range only spells further difficulties for borrowers.
Lawrence Smith of Decision Homebuyers assessed the gloomy outlook: “With two more serious blows in less than a week – first the effects of the Bear Stearns crisis on UK mortgage lenders and now the drastic shrinking of the subprime market – the housing market is edging ever closer to a crash, in which hard-pressed borrowers and owners alike may have little choice but to wait it out and hope things improve.”
For press enquiries, please contact Phil Rendall on 020 7099 9026
Email: phil ( @ ) dhbuyers dot co dot uk
Web: www.decisionhomebuyers.co.uk
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Decision Homebuyers carries out daily surveys of the national media to provide up-to-date news and commentary on the UK property market.
