The
UK has been greatly effected by the US credit crisis which
started in 2007. Originally some US lenders where allowing
many very high risk cases to complete. Such criteria included
dangerously high loan to value mortgages, with self certification
and adverse credit history.
Since some commentators have stated this was an inevitable
disaster just waiting to happen.
Many lenders were allowing these potentially problematic
cases through because property was increasing in value
rapidly and the mortgage book was then being sold on for
sercuitization in banks hedge funds. Since many banks
have lost millions in profits which has made some stock
markets fall.
Many
UK adverse lenders are US based and have beginning in
2008 in some cases completely removed all of the high
risk lending product. Alternatively if products have not
been withdrawn then many have had criteria dampened down
to reduce their risk.
Examples of this include reducing end of term age, pulling
high loan to value especially
125% and 100%, no employed self certificate, higher
deposits required, less heavy adverse credit, increased
completion and application fees.
Also the actual product rates may be higher and many cases
are being rejected due to nervous underwriting. The effect
of lenders pulling product means their profits margins
may be greatly reduced so they are looking for ways to
increase profits for example higher interest rates.
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