2007 - The Year for Sub Prime Lending

Word on the street is that a number of existing Mortgage Brokers, who traditionally have only offered loans from the main high street banks, are about to start agressivly chasing the “sub prime” market from this year.

The high street banks normally shy away from the “lower end” of the market (honestly they have!), but it seems that the brokers, individually, are arraning their own funding and will start lending money under the consumer credit act to those the main lenders refuse.

A timely shot in the arm for a property market that’s paused/stalled/hit a wall.

Blue Horseshoe

Seems like the sub prime market is being sanitised for public consumption. There was an ad on the radio this morning for sub-prime personal loans.

Sure, they call to your door for the payments, but according to the ad that’s the “convenient home collection”! And don’t you worry about your bad credit rating. Funny, there was no mention of competitive rates.

Noticed quite a few primetime TV ads in the last few days too.

“No proof of income? Bad credit rating? Refused loans by the banks? Bankrupt heroin junkie who served time for fraud? No problem! Our friendly local enforcers cough financial advisors will give you that loan, and call round to your house every week to make sure you pay up!”

The big story in the US housing market at the moment is the vast number of sub-prime mortgages that are about to reset from low introductory rates to full sub-prime rates, typically 2%+ above standard ARM rates. The number of defaults and foreclosures is soaring in many markets where affordability made sub-prime lending popular. But its not just the borrowers that are taking a hit a growing number of sub-prime lenders are going bust.


ahhh you can’t beat the personal touch of hired goons!

unison.ie/irish_independent/ … e_id=15188

IL&P joins fast rising sub-prime lending

IRISH Life & Permanent launched a joint venture with Merrill Lynch yesterday to target the fast-growing sub-prime market.

Springboard Mortgages is targeting people who have problems securing loans from traditional banks or building societies.

This can include people who have irregular income or have had problems repaying loans in the past.

Meanwhile, the market for sub-prime lending is growing so fast market leader Start has made a profit ahead of management expectations. Start issued €680m in sub-prime loans last year, up from €309m the previous year. This is a rise of 120pc.

Start is a subsidiary of British sub-prime lender Kensington Group. The Irish operation is 60pc-owned by Kensington, with the remainder held by Irish management. The Irish sub-prime market is already worth around €1bn, compared with the total mortgage market of as much as €41bn, according to recent research by Davy Stockbrokers.

Sub-prime (home loans for those who are considered high-risk borrowers) could expand by 75pc this year, the Davy report said.

At present, the sub-prime market is dominated by Start and a joint venture between GE Money and IFG Group.

Nua Loans, a joint venture between South African bank Investec, and Finance Ireland, also known as Fire, are set to enter the market.