Where Are All The Subprime Mortgage Deals?
The credit crunch happened. The credit crunch means that banks stopped lending money to each other, so credit dried up. And credit is the money that banks use to lend to people for mortgages, for credit cards and for loans. So without it there are no subprime mortgage deals. It has happened here and in the USA, and it is the reason that the world banks are pumping billions of pounds into the world markets – to try and bring back credit. Because with credit there will be lending between banks and then they can finally afford to offer subprime mortgage deals again.
Ironically, it was subprime mortgage deals that created the credit crunch. In the USA there were little or no regulations around mortgage lending, unlike here in the UK. So lenders and brokers could give anyone any mortgage they liked, and a lot of them were subprime mortgage deals. But these people could not afford these deals and they defaulted. The problem was that those mortgages had already been sold to other banks for a profit, and then sold again and again. So the bad mortgage debts were everywhere and banks became very suspicious of any investments. So they stopped lending to each other and we hit a crunch. A credit crunch.
To cope with the crunch, the lenders stopped offering risky deals, and only wanted solid borrowers with lots of equity and a guarantee that they could afford their mortgage. This meant stopping subprime mortgage deals, because they were the riskiest mortgages. That is not to say that there are no subprime deals anywhere, but they have been severely reduced. So that is why when you go online and search for subprime mortgage deals or you go to your lender, your choices are very limited.
But just because the crunch has hit, it doesn’t mean the end for those looking for subprime mortgage deals. You have to be proactive if you want to find a deal that will work with your situation. That means knowing your credit scores, going to a professional adviser and being willing to pay extra for your subprime mortgage deals. It also means creating a sensible plan of action and looking at economising wherever you can. It might be hard and it might take some time, but the credit crunch hasn’t left everyone out in the cold.