Sub-prime market in decline

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by Kay Murchie

Research from personal finance advice website, Moneyfacts.co.uk, shows that there has been a 71% fall in the last year in the number of sub-prime lending products available in the UK market.

There were 6,501 sub-prime products available to lenders in March 2007 but this has dropped to just 1,867.

In the last week alone, many organisations have ceased offering these types of mortgages, including Amber Homeloans, Scarborough Specialist Mortgages, SALT, as well as crisis-torn Northern Rock who said it will no longer be offering sub-prime mortgages funded by Southern Pacific Mortgage.

Julia Harris of Moneyfacts said lenders are finding it increasingly difficult to find funding for sub-prime mortgages. Investment banks have been hit hard by the troubles facing the US sub-prime market and therefore are less willing or able to securitise the mortgage books of UK subprime lenders.

In a society where we continue to witness ever-increasing debt problems, this is going to limit the options available to those that have to resort to sub-prime borrowing, added Ms Harris. According to Moneyfacts, this rapid decline continues the trend seen late last year.

Towards the end of last year, there was a severe drop in the number of sub prime mortgages available, concluded Moneyfacts.