Sub prime lenders involved in majority of repossession cases
November 9, 2007
According to a recent report by the BBC the vast majority of repossession cases in the UK involve sub-prime lenders, which are lenders that specialist in providing mortgages for those with damaged credit, the self employed, and those that are unable to prove their incomes.
The results of the research by the BBC were shown as part of a Panorama programme on BBC earlier in the week, and shockingly showed that around 70% of repossessions in the UK involved sub-prime lenders.
Over seven thousand court hearings were assessed as part of the investigation by the BBC, which has been taking place over the past few months. Sub-prime mortgages have been growing more and more popular over recent years, with an increase in the number of people with damaged credit in the UK. Around 8% of all mortgages in the UK are now sub-prime mortgages, although this is a drop in the ocean compared to the United States where over a fifth of mortgage come under the sub-prime category.
As part of the investigation the BBC revealed how many consumers fitting into the sub-prime category were being advised to lie about their income, stating that they were earning far more than they actually were in order to get a larger mortgage. The BBC revealed that some lenders and brokers were mis-selling mortgages safe in the knowledge that the debt would be sold on to another company before the borrower defaulted on the loan.
Repossessions in the UK have been rising over recent months as a result of increased interest rates, which have resulted in many borrowers struggling to keep up with repayments. With many others due to come off low fixed rates in the coming months, the number of repossessions in the UK is set to increase further.
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