Press Release Summary: Borrowers of sub-prime loans failing to repay amount
Press Release Body: Figures studied have shown that out of every five borrowers on sub-prime mortgages, one of them fell behind from their repayments which were scheduled in the first quarter of the year.
The percentage of borrowers on sub-prime deals who fell at least a month into debts rose to 21.7% in the first three months of the current year. These delinquent mortgages are being stated as per the ratings agency Standard and Poor's. Since the last quarter of the previous year saw a rate of 19.4%, this rate was certainly higher than that.
However, those borrowers who fell 90 days behind schedule of repayment of their arrears rose to double figures of 10.6%.
The sub-prime mortgages are meant for those people who are suffering from a poor credit history or are not able to provide proof of their earnings.
According to S&P, the credit crunch has led to a stricter criteria of lending and this will surely inflict problems for borrowers when they come to the end of their mortgages in this year. This will keep the delinquency levels higher and aid to the predictable future of the financial scenario.
These figures have been claimed only after making a thorough study of the sub-prime Market which is worth £3.84bn which represents around 80% of the total sub-prime market.
The behaviors of the "prime" borrowers have also been studied. Prime borrowers are those who are able to give an account of their income or enjoy a healthy credit history.
After the fall that was seen last year, it has been seen after the analysis of £250bn outstanding prime mortgages that the delinquencies have seen a sharp rise this year.
The levels now are similar to that seen in 2006 which has the number of mortgages at least a month in arrears increased to 2.41% of all loans. This means that there is a rise of 2.15% increase from the first quarter in the previous year. Also, the mortgages with arrears more than 90 days rose from 0.62% to 0.79%.
The repossession rates however have remained the same in the quarter.
The Council of Mortgage Lenders said last week that there was a prediction of 50% increase in the current year and the levels of repossession seemed to be working their wat towards this prediction. However, the cheap fixed-rate deals had been thought to be bad for the borrowers when they turned out to be not as bad.
According to the S&P, a bigger part of the borrowers were now preparing to keep steady on the standard variable rate or the SVR. This was happening after their special offer rate ended for a longer than before time. It also said that the borrowers were not willing to get fixed rates which seemed to be just slightly better because they believe that it is going to get better for them due to the competition.
Unusually enough there are many lenders who offer SVRs that are comparatively lower than the fixed or tracker rate loans. Also, the deals are not charged any arrangement fees or early redemption charges.
2022
