Mortgage Information

Mortgage Types

S&P clarifys the risk of mortgage lending


A highly rated agency will today report that mortgage lending criteria has been "relaxed" in riskier areas of the mortgage sector mainly buy-to-let and subprime lending to people with bad credit history.

Standard & Poor's feel if the UK housing and mortgage markets slacken, lenders with positive exposure to specialist mortgage lending could feel the result.

The ratings agency commented: "Current arrears are manageable because customers are quickly able to refinance to prime products and cheaper pricing."

"UK mortgage borrowers are exposed because they are highly levered, while UK house prices are volatile and can fall. It could be argued that the spurt in house prices over the past year or so, when a prolonged soft landing seemed more likely, could make a more painful outcome more likely."

S&P highlights the potential risks in sectors such as self-certified mortgages, where customers could easily false their income.

Even though buy-to-let lending "warrants caution", it is mainly to be of "significantly greater risk than the prime market and the key factor here is likely to be house price inflation".

Free Mortgage Enquiry