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As the UK economy continues to dive bomb towards recession the Bank of England has given its most blatant indication to date that interest rates will fall again in January. The indication was that...
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Wednesday 11th July 2007
Britain's sub-prime mortgage market grew by 28 per cent in 2006, research from analyst firm Datamonitor suggests.
Sub-prime mortgages, which cover individuals unable to secure a mortgage from mainstream providers because of bankruptcy, poor payment records or other reasons, totalled £24.6 billion in 2006 and could reach £31.5 billion by 2011, today's report claims.
Datamonitor believes buoyant economic conditions and the ready availability of credit are driving the current growth, with low unemployment, strong property prices and low interest rates all contributing to high levels of consumer debt at present.
The recent slight deterioration in the economic situation is good news for the sub-prime market as it means more people will be rejected by conventional mortgage providers, Datamonitor says.
However increased consumer indebtedness also means the market will carry more risk as the danger of a sudden increase in defaulters rises.
Today's report say the crisis in the US sub-prime market, which has seen this scenario become reality in the past year, should not be lightly dismissed by those relying on its British counterpart.
Report author Maya Imberg said: "Despite the argument that they have sophisticated underwriting models in place, UK sub-prime lenders should take the US sub-prime mortgage crisis as a warning and ensure they are not over-exposing themselves to highly risky loans."
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