Government Support Required For Sub Prime Loans
We have reported on a couple of occasions recently on how one or two lenders are tentatively starting to dip their toes back into the waters of sub prime loans, or bad credit loans, albeit in a very small way.
Although there is a growing demand for sub prime loans for house purchase, there is still a lot of negativity from both the loan industry and consumers alike, regarding this important sector of the loan market.
Moore Blatch Solicitors, who specialise in repossession cases, are now calling on the government to support the sub prime loan market and if necessary, force the nationalised banks to offer home owner loans to those borrowers who would now be classed as sub prime.
The market for sub prime loans was always a large one, but since the effects of the credit crunch and recession have hit many consumers in the UK, Moore Blatch have estimated that the number of potential borrowers who could now be called “sub prime” is somewhere in the region of 1 million and the majority of these individuals are now completely excluded from the loan market, in many cases through no fault of their own.
Although Moore Blatch believe that the nationalised banks should start to offer sub prime loans once again, they acknowledge that there need to be strict guidelines put in place to prevent a similar situation arising as we have seen in the past, with regard to irresponsible lending.
They suggest regulation to disallow someone who has been accepted for a sub prime home owner loan to be able to take out a personal loan or credit card soon afterwards, thereby getting themselves back into potential financial difficulty.
Paul Walshe of Moore Blatch said “Unless the sub prime market returns we will create a housing underclass, many of whom ended up there through inappropriate lending by credit providers who took no account of the possibility of future personal or broader economic conditions.”
