End of specialist lending could hit the housing sector
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Regarding your story headlined ’80% of borrowers face payment shock if interest rates increase’ (Mortgage Strategy Online), it does not matter if rates rise in 2010 or 2011 - either way thousands of customers will be in for rising repayments.
The biggest problem will be for sub-prime borrowers who will be left at the mercy of their lenders, with nowhere to go to.
Only then will we see the true impact of the demise of the specialist lending market on the property sector.
A sub-prime house is identical to a prime one, the only difference being that if a sub-prime property is repossessed it will have a knock-on effect on the value of others in the area.
If we start seeing large-scale repossessions the effect of this could be catastrophic.
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