Press Release Summary: According to a review by the Financial Services Authority, the sub-prime borrowers rely on their brokers while borrowing money rather than shopping around and making well-informed choices themselves.
Press Release Body: London (longdogfinance) April 2, 2008: A research conducted by the Financial Services Authority in September 2007 reveals that those seeking lifetime mortgages were in a position to make informed choices, but the sub-prime borrowers were mostly relying on their brokers only. Sub-prime borrowers tended not to verify the information provided to them by their brokers, assuming that the options would not be inappropriate.
The research was carried out before the credit squeeze adversely affected the availability of credit in the UK sub-prime market. Currently, the sub-prime borrowers can hardly cheap loans from the market as the rates are high, credit availability has been squeezed and the lenders are unwilling to assume risk in the present situation.
The report revealed that the sub-prime borrowers were happy to rely on information provided by their brokers about the potential risks of taking the mortgage or home loans. The report concluded that the cost remained the dominant factor for the sub-prime borrowers. The report stated: "For sub-prime consumers the overriding consideration is to find the cheapest deal or APR (annual percentage rate); for lifetime consumers, it is finding products with lower interest rates."
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