Credit Crunch Explained:
In the Summer last year the credit markets started to get worried about the fall-out from the sub-prime market in the US. Most of these sub-prime mortgages were packaged up and then sold on as structured products to financial institutions such as banks, insurers and hedge funds. Now the holders of these structured products are suffering large losses because there is a rise in mortgage arrears with these sub-prime loans.
This has happened because in the US, interest rates are rising, house prices are falling and people can't refinance as quickly as first thought. The major factor influencing the money markets is that if these sub-prime loans are doing badly then there is a risk that no one wants to buy structured products of any type. And that's one of the main reasons why the equity markets are falling.
The way this works, is that the banks will initially provide a bridging loan type of financing, but then ultimately look to syndicate the debt away to other banks or hedge funds.
The short term remains very uncertain given we will get more headlines on banks' exposure to sub-prime in the weeks ahead.
We have all seen what happened to Northern Rock last year and now Lenders are even more cautious in the uk to lend new mortgages to consumers. Please look at our news item What are lenders lending for more information
Marks & Spencer Hit By the Credit Crunch for £1billon
Share prices in Marks & Spencer have fallen by £1billon on weds this week after the Chief Exc annouced that the impact of the credit crunch has seen a downfall in sales. Marks and Spencer said that due to the credit crunch sales have fallen by over 5%. In return to this comment traders downed its share valve by 25%.
Marks & Spencers also annouced that S Esom head of its Food Business would be leaving the company. Because of the credit crunch and Marks and Spencers problems other retail stores have also seen a hit on their shares. The credit crunch first hit the banking and property sector is now spreading out into the rest of the enconomy as people reduce thier spending.
Britons might be feeling the Global pinch of the Credit Crunch, however despite the crunch they are still ready to pay ....More
New mortgage customers will once again be able to apply for a home loan through first direct. First had frozen new applications because it was unable to cope with such high demand....More
According to a report from the BBC House Prices......More
Lending is down by 40% in the last year...more
The Bank Of England have reported ...more
People want property prices to fall......Read More
Your Not Alone
You wont be suprised to hear that you are not alone if you are struggling to keep up repayments....more
The Middle Class In Britain now being hit by devasting debt crisis. More and more middle class are seeking debt help.....Read More
Mortgage Lenders are reducing the amount of money they are willing to lend to us. For an example last year it was possible to buy a property without a deposit(100% mortgage). Now with most lenders you will need at least 10% Deposit. For more information on what lenders are lending click here
Mortgage lending is at its lowest level for 33 years, according to figures from the Council of Mortgage Lenders (CML).
The total number of mortgage lent in the first quarter of this years is just 142,000 This is the lowest quarterly figure since 1975.
The CML predicted lending and house sales would fall even further in the next few months because of the credit crunch affecting the banking system.For more info click here
At The Manchester Mortgage Expo Being held on 14th and 15th of May The Council Of Mortgage Lenders revealed click here
Many believe that we are going to see a fall in house prices over the next 2 Years.... more
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