Sub-prime mortgages at a higher risk of repossession

Research by Five Live and BBC’s Panorama shows that 70 per cent of all homes recently repossessed were bought with sub-prime mortgages.

Sub-prime mortgages are aimed at lenders with a bad credit rating and according to the BBC make up eight per cent of the total UK mortgage market.

Shown in a Panorama documentary, some homeowners are paying interest rates of up to 11 per cent. Many of these are borrowers with low income, such as the Bradbury’s who bought their council house under a right-buy scheme.

In the documentary Mr Bradbury says: “I’m at the mercy of the interest rate. If it goes up again, I’ll struggle, I’ll try and meet it. But after that if it goes up again I can’t. We’ll just lose the house.”

Sub-prime mortgages charge higher interest rates due to the high-risk factor of lending to people with bad credit ratings.

According to the programme, 7,000 homes have been repossessed in the last three months. This is the highest figure in eight years.

© Adfero Ltd

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