Our own Sub Prime on the way?

[joe-90]

Most people will know that loans in the USA were given to people that couldn't really afford them. When they defaulted this caused the property market to tumble. The banks repossessed the houses but were left with negative equity as the houses were now worth much less than the mortgage on them. Most of such properties stand empty and derelict.

But could it happen here? People like Northern Rock gave out loans of up to 6 time a borrower's salary on 100% mortgages. When the low rate fixed deals came to an end then rates went up steeply and people are struggling to pay.

If they default this will cause the property values to fall even further pushing more people into negative equity. It's tipped that interest rates will rise sharply over the winter as will petrol and gas prices. Can these people afford their houses? Isn't this an identical situation to the USA sub-prime market?

So can it happen here? Waddya reckon?

 

[big-all]

in america there was a lot of deliberate selling to people who had no hope in hell of paying the morgadges [unemployed/on benefits] knowing full well the buisness was going to be sold on

 

[Atilla]

But could it happen here? People like Northern Rock gave out loans of up to 6 time a borrower's salary on 100% mortgages. When the low rate fixed deals came to an end then rates went up steeply and people are struggling to pay.

No different to many other establishments.
What did for Northern Rock was their business plan.
Over reliance on the money markets to fund their mortgage business and not balancing this with the deposits from savers.
Then when the markets panicked, that left NR unable to access the money to fund their business.

It must be remembered that the financial institutions all lend and borrow off each other often for very short periods of time. Freeze the supply chain and things very quickly fall apart, just like any business would.

 

[Nige F]

came to an end then rates went up steeply and people are struggling to pay.

. Freeze the supply chain and things very quickly fall apart, just like any business would.

And the supply chain is FED from where

 

[easybuy]

Joe the main difference between the american market and our own is that theres is not regulated, hence the high number of people with mortgages on low income ( In some cases none).


I am aware the practise on occasions happens in the uk but we are far more regulated so less frequent.