Tue 27 May 2008
Mortgage market update
In the marketsMore than a fifth of UK homeowners who suffer from a poor credit history have fallen behind on their mortgage payments.
Data compiled by financial services company Standard & Poor is based on the behaviour of homebuyers whose loans are tied up in mortgage-backed securities, which accounts for 80% of the £43 billion sub-prime mortgage market.
The new research shows that of all loans made to borrowers with a poor credit history, total delinquencies, which are defined as arrears of more than 30 days, were made by 21.73% of loan holders. Those in serious delinquencies, defined as arrears of 90 days or more, totalled 10.6% of the sub-prime mortgage market.
Standard & Poor’s figures illustrate that buyers risk defaulting on more than £7 billion worth of loans in the future unless lenders agree to modify their loan terms, pointing out that the rise in sub-prime arrears threatens further problems for the economy, and the banks that bought securities backed by these loans.
On the high street
Meanwhile, new homebuyers looking for mortgage approval are being denied access to the best mortgage deals after some of the UK’s biggest lenders took a decision to offer their top rates only to customers who approach them directly.
The banks’ decision to take the best rates away from brokers has impacted sharply on the industry, which has lost 15% of its members since the credit crunch started in mid-2007. HSBC, NatWest and Royal Bank of Scotland are among those who have decided to only distribute their best products internally.
The Association of Mortgage Intermediaries estimates that the number of mortgage brokers, who sell almost three quarters of UK mortgages, has fallen from 30,000 to 26,000 in this period.
“This dual-pricing is to the detriment of brokers, but it is also to the detriment of consumers, pushing them away from advice and leaving them in danger of not getting the right deal for their customers,” said David Hollingworth of no-fee mortgage broker London & Country. “No one wants to step back ten years to when borrowers had to go face-to-face with bank staff to get a mortage.”
Posted by Natalia Gameson
in David Hollingworth, HSBC, London & Country, NatWest, News, Standard & Poor, The Royal Bank of Scotland on Tue 27 May 2008
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