These repossession figures are good indicators of the financial climate, as for many the last things they want to do is lose their family home
(PRWEB) February 20, 2008
The BBC today announced that they have found in a recent survey that nearly half of all repossessions come from the sub-prime mortgage market. Many people who have debt issues have mortgages with sub-prime lenders. The sub-prime mortgage market makes up around 6% of total mortgage lending, according to the BBC Web site. Sub-prime mortgage are often at higher interest rates than those on offer from say the well known high street lenders, who deal mainly with prime lending. This is because the client is often seen and a higher risk when lending, therefore Sub-Prime mortgages are a little more expensive.
Matthew Murray, Senior Mortgage Broker at EA Money said, "Many people who have credit issues or high are in debt are looking at using a sub-prime or specialist lender because high street lenders will often not cater for them. It's difficult in many cases to find a completive rate and to find a rate which fits the affordability of the client." Murray continued, "Some people who are now re-mortgaging are trying to grab a good deal, but because of interest increases over the last few years, clients are now often choosing Interest only mortgages, just so they can afford them as this brings the monthly payments down. But for some, they were already on an interest only mortgage therefore the increase in monthly payments maybe adding even greater financial pressure on to those already struggling with debt and this is just increasing their debt."
The latest results form The Debt Counsellors survey (http://www.debtcounsellors.co.uk) showed that when asked, 400 out of the 457 said they felt that Credit companies didn't adequately check if they could afford to pay back the money. Although a percent of these were neutral, it does question why credit companies don't do more to check.
Murray went on to say "If banks are going lend so easily, especially to people with existing issues is it any wonder that repossessions are on the increase."
"Many would think with more people seeking these types of mortgages the repossession rate will increase, which means less people affording and wanting houses and it all goes towards slowing the system down which could lead to an even bigger issue of a recession," stated Murray. "These repossession figures are good indicators of the financial climate, as for many the last things they want to do is lose their family home".
To find out more about how The Debt Counsellors can help reduce debt burden and how to become debt free in 36-60 months, please call: 0800 018 6018 or visit http://www.debtcounsellors.co.uk.