20 per cent of subprime mortgage customers default

Tue, 27 May 2008

According to recent research by the rating agency Standard and Poor’s, some 20 per cent of all subprime mortgage customers in the UK have missed at least one mortgage repayment .

The level of missed repayments has increased since the last study, with over ten per cent falling into arrears lasting 90 days or more. Figures from the study also indicate that some £7 billion worth of mortgage loans could be at risk of default .

Subprime mortgage lending is a niche area of the mortgage market that has become significantly less attractive to lenders in recent months. Subprime mortgage loans were pitched at borrowers with imperfect credit history, and surged in popularity in the early 2000s.

Sean Hanning at Standard and Poor’s was reported in the news as commenting: "The difference today is that borrowers are not being helped by rising house prices as they have been in recent years. In previous years, homebuyers in difficulty could find another lender to refinance the mortgage. It could mean that now more homes wind up in repossession ."
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