Irresponsible lenders ‘adding to mortgage debt problem’
Irresponsible lenders are compounding the debt problem for sub-prime mortgage customers, it has been claimed.
The products are typically provided to customers with a debt problem who find difficulty in obtaining a standard mortgage.
However, research from the Financial Services Authority (FSA) shows that many lenders are not carrying out basic affordability checks before providing funds to sub-prime borrowers.
The authority detects a “high level” of mortgage arrears among sub-prime borrowers which it suggests could be eliminated if adequate checks were carried out by providers.
“Consumers in the sub-prime market are vulnerable people who may have high debts or a bad credit history,” explains managing director of retail markets Clive Briault.
“It is therefore important that they are properly assessed and advised.”
The FSA states that while all lenders it investigated had some provision for assessing affordability among customers, not all firms implemented their own policies fully.
Britons with a debt problem may welcome professional advice before obtaining a mortgage.
Leave a Reply