Sub-prime mortgages boom

11/07/2007

The sub-prime mortgage market expanded by 28 per cent during 2006, reports the Datamonitor group.

With the sub-prime mortgage deal you can cover individuals who can not secure a mortgage from a mainstream provider because of their poor payment history. Figures totalled at 24.6 billion during 2006 and potentially could reach 31.5 billion by 2011.

Datamonitor feel that buoyant economic status and the ready availability of credit is causing the flowing growth, mainly low unemployment, high valued property and low interet rates all in one leading to high levels of consumer debt.

Datamonitor stated that due to the complications and rejections by conventinal mortgage providers, this has only cause sub-prime mortgage to grow more intensivly.

Disadvantages to this however still remain strong as increased consumer indebtedness means the market will have a stronger risk and be more dangerous, if a sudden increase in defaulters rises.

Maya Imberg a report author said: "Despite the argument that they have sophisticated underwriting models in place, UK sub-prime lenders should take the US sub-prime mortgage crisis as a warning and ensure they are not over-exposing themselves to highly risky loans."

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