Sub-Prime Borrowers "Set Up To Fail"

If you've been watching the news of late you can't have failed to notice how difficulties in the American sub-prime market have rocked financial stability across the globe. However, a new report by the Citizens Advice Bureau suggests that the recent trend for sub-prime lending is causing similar problems in the UK too.

In the last year the Citizens Advice Bureau have reported an 11% increase in the number of calls they've received from the UK public regarding widespread difficulties meeting secured loan and mortgage repayments. A figure accompanied by a substantial rise in repossessions and court cases relating to home loan arrears.

The CAB report that the problems mainly sit with individuals on low incomes who were encouraged to borrow against their property only to be unable to meet the repayments and find themselves faced with unmanageable debt and repossession orders.

The report also suggests that many of those who borrowed on the sub prime market were ill advised by the brokers who sold them their mortgages, often being encouraged to inflate their estimated income, borrow in excess of their property's value or pay out for payment protection policies that have failed to pay out in their time of need; issues that have only paved the path for future difficulties.

As sub-prime mortgage lenders are not know for leniency in arrear cases many borrowers have been caught short through little fault of their own. Unaware of the risks associated with secured borrowing many have found themselves unable to meet mortgage repayments when their initial discounted offer ended only to be faced with homelessness.

At the present time there is little in the way of state support available for all individuals in this situation. However, the Citizens Advice Bureau are pushing for the government to tighten up on broker regulations and to introduce better assistance for those caught out by mis-selling in the sub prime market. Hopefully these actions will soon be enforced, preventing this repossession cycle from happening again.