America is a land of housing market booms and busts, and yet it seems that the
mortgage market could be being undermined by high foreclosure
rates, prompted by
subprime mortgage lending .
Apparently, thousands of Americans have taken out
loans banking on the fact that
property prices will continue to soar. Yet they are finding themselves unable to pay their
mortgages, according to American financial experts, and many face the possibility of losing their house or even becoming
bankrupt .
Sub-prime mortgages are offered to borrowers who have a patchy
credit history. Valued from light
adverse to heavy adverse depending on missed
repayments,
county court judgements, and other
credit history faults, subprime lending has soared in the UK. They are usually offered at higher than average
interest rates .
If house prices don’t climb over the course of the
loan, many sub-prime borrowers can face difficult circumstances. Accordingly, this is the situation in
America, where bank rates are climbing and
property prices falling.
One
investment guru, Jim Rodgers, reportedly commented on the situation: "You can't believe how bad it's going to get before it gets any better, it's going to be a disaster for many people who don't have a clue about what happens when a real estate bubble pops. It is going to be a huge mess."
