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Getting a Loan with a Bad Credit History since the US Market CrashThis year's financial market crisis, most prevalent in the US, appears to be gradually recovering. However, it has left the main banks and building societies in the UK and elsewhere around the world nervous about lending to the sub-prime market, and has caused many to tighten their lending criteria. Sub-prime mortgages and loans are those offered to customers with poor credit histories. In the US due to the low interest rate during the last five years, banks lent a large amount to people with bad credit histories. The default rates on these loans have been rising in the US due to rising mortgage rates. Now lenders in the UK are beginning to tighten their loan criteria and raise their interest rates - by 0.5% - 2.5%. Many homeowners with anything less than a perfect credit history are finding they are only able to find a loan with the less strict conditions of smaller independent lenders. Around 10% of homeowner loans in the UK are sub-prime mortgages. Due to the increased risk to the lender, a person with an adverse credit record will be subject to a less competitive interest rate. But some homeowners are prepared to balance this with bringing their monthly payments down to a more affordable amount. It is always advisable to get at least three quotes for any loan or mortgage package and to carefully compare the interest rate, loan period and repayable amount. According to accountancy firm Grant Thornton personal UK debt has reached £31,345 billion, which now exceeds Britain's annual economic output. The UK housing market is stronger though than the US market, and house prices are unlikely to crash, despite repeated rising interest rates, because basically demand continues to exceed supply. The bottom line is that in the UK we are not building enough affordable houses. More Financial NewsHouse prices up - Demand downWealth Gap biggest for 40 yearsBrown promises three million more affordable housesImportant Checks Before You Sign Up For a LoanGetting a Loan when you have a bad history 'more difficult' say Lenders |
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