UK sub-prime market smaller than US'

The UK sub-prime mortgage market is "comparable" to that in the US but on a smaller scale.

That s the opinion of the International Monetary Fund (IMF), which has published its Global Financial Stability Report.

In the report, the organisation compares the UK sub-prime market to that in the US and says that some of the same dangers are present.

Bad credit mortgages have recently become big business in this country but following the fallout in the States it seems that some lenders have become more reluctant to lend.

However, this is unlikely to remain the case for long and, although the IMF did highlight some problems with the UK model, it also pointed out how it is different from the US.

"The rapid deterioration in the US non-prime mortgage sector has also led to concerns about dislocations in non-US mortgage markets, especially in the UK non-conforming mortgage sector," read the report.

"The UK non-conforming mortgage market is somewhat comparable to the US sub-prime market, though about one-half the outstanding [loans]," it continued.

The report also pointed out that sub-prime mortgages accounted for ten per cent of the market in the US, while they account for just five per cent in the UK.

Related Articles