25% of August sub-prime mortgages now rejected
Mortgages: Sub-primers rejected
Friday, 12, Oct 2007 10:16
A quarter of sub-prime mortgage applications accepted in August would now be turned down.
Specialist independent mortgage broker the Mortgage Lender reveals the credit crunch is now hitting borrowers with a less than perfect credit history - leaving many being turned down or facing higher repayments.
"A mortgage taken out in August by a customer in our sector - people who have a poor credit history - will now cost from £60 to £200 a month more," said David Titmuss, managing director of the Mortgage Lender.
"Lenders are also tightening up on 'affordability', which is calculated from disposable income. With the higher rates even fewer people will get a mortgage - that is above and beyond the 25 per cent of applicants who already do not meet lending criteria."
Mr Titmuss went on to predict a less than rosy picture for the economy as a result of the credit crunch.
"We believe that the potential impact upon the economy may be considerably more than most commentators have stated," he said.
"There will certainly be even more home repossessions, and the overall result will be a fall in house prices as the money to buy them simply contracts."
Meanwhile, online mortgage firm mform.co.uk predicts the number of sub-prime borrowers in the UK will expand.
"Our research shows that between now and 2010, some 3.7 million people intend to borrow over four times their salaries when they take out a mortgage and a further 4.5 million intend to borrow between three and four times," said Francis Ghiloni, mform business development director.
"In the current climate, many lenders will be less willing to take on this type of risk."
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