Trouble Trying to Find Cheap Mortgage Deals?

Writing by Paul on Friday 18 January 2008

Sub-Prime Credit Crunch Overview

The sub-prime sector represents around 9% of the total mortgage market. Over the last few years, as new lenders have entered the market and competition has increased, operators have relaxed their lending criteria and taken on bigger risks in order to win their share of the business.

Northern Rock Crisis

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This was sustainable and profitable while interest rates were still low. However, recent events in the US and interest rate rises here in the UK have changed all that and made it much tougher for lenders to fund their businesses. This has been no better illustrated than the crisis at Northern Rock.

High Risk Lenders Lose Value

The high risk model operated by sub-prime lenders makes them most vulnerable to the ‘credit crunch’ and Paragon, the buy-to-let mortgage lender, appears to be the latest casualty after a 40% collapse in their share price in November. The increased cost of borrowing and lower levels of market confidence have lead to credit card and store card providers rejecting more and more applications with some are turning down around half of all new applications at the moment. There are problems too in the personal loans market where higher risk loans are being withdrawn by lenders across the board as they become more and more cautious.

Higher Mortgage Rates & Lower LTV

Virtually all mortgage lenders have changed their Loan-to-Value ratios (the amount they will lend in proportion to the property value), increased their mortgage rates and reduced the amount they are prepared to lend Many people will have fixed rate mortgage deals that are shortly coming to an end They will face a particularly shocking rise in their monthly payments, because their lender’s standard rate will have risen so much during that time, and will find it increasingly difficult to access a more competitive alternative.

No Fees from Who’s Lending

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Who’s Lending? is the whole of market mortgage broker that doesn’t charge a fee. As such, no-one is in a better position to find a client a cheaper mortgage. The company sits under the same roof as Payplan, enabling us to provide a complete portfolio of debt solutions and total impartiality. Re-mortgaging where appropriate can help people reduce monthly outgoings or release equity in order to placate creditors and protect their home.

For immediate and free debt and financial advice please call Payplan free on 0800 917 7823 or use our Debt Calculator to submit your financial situation online.

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