Sub prime borrowers 'most vulnerable'

Posted: 11 Apr 2007 11:42:16 GMT

Borrowers on sub-prime are thought to be among the most vulnerable in the market, often at the furthest extremes of affordability and tied into long-term, inflexible and expensive mortgage deals.

Borrowers on sub-prime are thought to be among the most vulnerable in the market, often at the furthest extremes of affordability and tied into long-term, inflexible and expensive mortgage deals.

Some experts argue that these borrowers are at significantly higher risk of exploitation due to their circumstances, potentially subject to higher costs.

Designed for those with poor credit histories who find it difficult to buy a property, sub-prime mortgages tend to carry higher than average interest rates.

Louise Cuming of moneysupermarket.com maintains that efforts should be made to protect sub-prime borrowers, welcoming the recent decision from the Financial Services Authority (FSA) to concentrate on areas in mortgage lending where borrowers could be at risk.

"There needs to be more alignment between the level of risk and the price the person pays," she stated.

"We must ensure that the balance is fair and the industry is not preying on those with the least options."

Initial findings from the FSA's probe into sub-prime mortgages are due to be reported in the first quarter of 2008.


© Houseladder Ltd