UK Home Buyers Face Wrath of US Crisis With Further Market Clampdowns

By Stewart Douglas

Aspiring UK home owners, with bad credit history, are finding it increasingly difficult to get onto the property ladder, analysts have revealed.

Following a slump in the US markets - through the realisation that the ratio of sub-prime bad debt will be higher than expected - lenders have responded by re-aligning their willingness to give credit in fear that they may be hit as hard as their US counterparts.

Sub-prime refers to debt that lenders accrue from customers with a poor, or limited, credit history.

The UK financial services industry has responded through clamping down on their loan requirements, having already taken a hit on the FTSE.

With predictions of higher bad debt than expected, lenders have decided to push up rates for existing customers as well.  Experts say that small businesses will also face some of the backlash in the industry’s attempts to compensate for losses.

Until recently getting a mortgage has been easy, according to some city analysts. However, lenders are now being forced to consider the prospect of writing off more debt, which has hit the public markets, forcing them to react.

Some experts, however, are suggesting this to be a knee-jerk reaction, with less than perfect parallels between the UK and US economy at this time.

Their claims, focused around the problems in the US property market, suggest that in the UK lenders would have no problem recouping bad debt while property prices remain as they are – something which can’t be said for US lenders.

Today rates hiked around 0.5% in the sub-prime mortgage market, with many would be home owners now being rejected that would have been suitable candidates weeks before. Despite the reaction, public markets aren’t yet fully confident they have everything under control – with city executives set to take the first hit as bonuses get slashed.