First time buyers given subprime warning

03-Jul-2007

First time buyers considering taking on mortgages which they are ill-equipped to pay are set to be warned by the Financial Services Authority (FSA), it has been revealed.

The financial regulator is concerned over the state of the subprime market, particularly whether or not some consumers with poor credit histories have been incorrectly sold mortgages that are beyond their means, the Financial Times has reported.

The FT has noted that arrears in the subprime market are currently 20 times those of more standard mortgage borrowers, with the FSA reportedly also worried about homeowners borrowing against their property.

"The last UK housing boom and bust at the end of the 1980s to early 1990s and the fall-out that we are currently witnessing in the US sub-prime mortgage market are indications of what could happen [in the UK]".commented FSA retail markets managing director Clive Briault at the recent Building Societies Association conference.

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