Lenders are cracking down on sub-prime borrowers across Britain and could force tens of thousands of homeowners into forced sales of their homes, property experts warned yesterday.
The global credit crunch provoked by the crisis in American sub-prime mortgages is creating a time bomb in Britain’s own market for loans to borrowers with imperfect credit records.
The warning came as figures from the British Bankers’ Association (BBA) suggested that the slowdown in house prices was on course to be the most severe in at least a decade, as would-be buyers take fright at a declining market.The number of mortgages approved in October for home purchases by the BBA dropped by 17 per cent over the month to only 44,105, the lowest figure since the body began to compile figures in September 1997. Approvals were 37 per cent lower than a year ago.
Experts fear that the emerging British sub-prime crisis could further destabilise the domestic property market. As existing homeowners with particularly bad credit records ”“ known as “heavy” sub-prime customers ”“ come to the end of the cheap two-year fixed deals that were readily available until the summer, lenders are refusing to offer similar terms.