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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?
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?