First time buyers to push sub-prime levels higher

11-Jul-2007

Sub-prime mortgage lending in the UK is set to grow further in coming months, coming on the back of a significant increase in market growth last year.

The prediction comes from market analyst Datamonitor, which notes that last year's market grew by 28 per cent in terms of gross advances, rising to £24.6 billion. The firm estimates that this will rise to £31.5 billion in 2011.

Last week the Financial Services Authority (FSA) announced that it was to investigate the lending practices of several firms within the sub-prime sector, following concerns over responsible lending. Yet high debt levels and rising interest rates will nonetheless mean that activity in the sector continues to flourish, Datamonitor suggests.

"Despite the argument that they have sophisticated underwriting models in place, UK sub-prime lenders should take the US sub-prime mortgage crisis as a warning and ensure they are not over-exposing themselves to highly risky loans," advised Maya Imberg, the firm's financial services analyst.

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