Sub-prime drives UK repossessions
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Sub-prime lenders are bringing more than half of UK repossession orders, despite accounting for just 6% of total mortgages, a BBC report has found. The sub-prime market caters for people with poor credit histories and has been under pressure because of an increase in interest rates and borrowing costs in UK. Official figures showed last week that actual repossessions rose to an eight-year high of 27,000 in 2007.Analysts have warned that conditions may deteriorate further this year. The research on sub-prime repossession orders was carried out by BBC Radio Five Live's Wake up to Money programme, which looked at 1,200 cases going through 18 county courts in January 2008. It found that more than 10% of the cases were brought by two sub-prime lenders owned by US investment bank Lehman Brothers. However, it must be said that most court possession actions do not always lead to repossession because borrowers in trouble usually reach a settlement with their lender or sell their house to meet overdue payments. Bad credit Sub-prime operators say that it is only natural that default rates will be higher amongst their customers, many of whom have bad credit histories. But the degree to which sub-prime lenders dominated the sample is surprisingly large, experts said. Southern Pacific Mortgage Limited (SPML) and Preferred Mortgages - both Lehman Brothers offshoots - were named in 148 cases in the sample. |
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