It was James Brown who sang about living in America. Well I don't suppose the Godfather of Soul had a sub-prime mortgage, because - as is in the news on a near daily basis - things are far from rosy across the pond in the mortgage market.
The problems are clear. Oversupply of property, combined with higher interest rates (no less than 17 hikes in the base rate over the past three years), has seen the housing market go flat. Intense competition has made lenders more willing to loosen the lending criteria – evident by the high number of 100% LTV deals on offer. Alongside this, in the terms of many contracts, lenders are obliged to buy the loan back if it defaults in the first six months. As the market has slowed, the number of defaults and repossessions has – naturally – risen, and some smaller lenders have not had the liqui...
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