SGAM predicts US-style subprime meltdown in UK and Europe

While the US is at the epicentre of the current turmoil in financial markets, it not alone in having experienced more “flexible” mortgage lending practices, a boom in house prices and a parallel sharp increase in household debt levels. And, while there is a lesser risk of a sub-prime type scenario in Europe, some serious concerns exist, according to SocGen’s economic spokesperson, Michel Martinez. “Although mortgage lending practices in Europe have become more ‘flexible’ in recent years, credit standards have in aggregate not been slackened to the same extent as in the US,” he said. ...