Mortgage crisis

Your Credit Connection

Bad credit

Mortgage crisis

15th February 2010

We first started noticing the mortgage crunch in the United States back in late 2006 early 2007. Now with banking institutions facing in the UK in trouble we have to ask ourselves what can we do? Like some I personally don't believe this to be a credit or mortgage crisis as much as a BANKING CRISIS. How does someone come to draw a conclusion like this you might ask? Banks were approving people that had no way of paying them back the money they borrowed. The banks were giving out sub prime loans. What is a sub prime loan? A sub prime loan is a loan given out to people with bad credit at higher than usual interest rates. Banks were giving people the power to borrow out side of their income range.

To fix this problem banks are now in a mild lending freeze. Many banks are now looking over borrower's credit history more closely and even checking financial references. Borrowers that would have qualified a year or two ago are being turned down due to their credit. In April the Bank of England reported having only 58,000 mortgages approved. This was the lowest record so far and was far worse than March's record low of 64,000 which was later revised to 63,000. Many experts see this as only getting worse do to the rising prices of oil and gas. With many believing the US is already in a recession it is safe to assume that the UK will soon be in one as well.

The US has currently let go 3 CEO's from leading banking firms. Merrill Lynch, Citi Bank, and most recently Wachovia have all replaced their CEO's since the US banking and stock market have dropped. Since some UK citizens own property in the US many are facing the tough banking issues as well.

Bradford & Bingley has warned of the credit crunch they are experiencing and the defaults on mortgages. B&B has had losses for the first 4 months of this year with the rest of the year not looking well for them they have again cut their request for funding and there are even talks they are selling a 23% stake to a US based investment firm. Many banking institutions in the US have had issues with people defaulting on their sub prime loans. That leads us to ask if the UK is going to be the next hit.


Posted in Mortgages

 
Contact Us | October 16th, 2019