Predicted sub prime collapse ‘may cause bad credit difficulties’
Thousands of Britons could soon struggle to make secured loan repayments, a credit rating agency has warned.
According to Standard & Poor’s (S&P), a slow down in the housing market could cause the British sub-prime mortgage industry to collapse. As it shows similar signs as the United States in which borrowers were unable to make bad credit loan repayments, reports the Evening Standard.
S&P suggest that Britain is not experiencing as severe problems as the US, a spokesperson told the publication: "Nevertheless, overall arrears and repossession rates in the UK non-conforming sector are on the increase.
"Looking forward, we expect a continued slow deterioration in arrears in the short-term, as recent rate rises work their way through."
S&P’s announcement comes ahead of the Bank of England’s meeting tomorrow on whether to adjust interest rates.
The Evening Standard reported that although economists are unsure whether the Bank will decided to keep April interest rates constant, a quarter percentage point increase "is expected some time this spring".
Earlier this month, Global Insight chief economist Howard Archer reported that any slowdown in house price is likely to be "gradual" as borrowers feel the effect of three interest rate rises since last August.
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