Mortgage borrowers face sub-prime future

Many mortgage borrowers face being put on adverse credit mortgage deals once their current fixed-rates come to an end.

Around 40,000 to 60,000 homeowners each month are set to see their fixed-rate deals end between now and August 2008.

Mform warns that with the global credit crunch having lead to many lenders tightening their criteria, thousands of people coming off their current deals could not be classed as sub-prime borrowers.

"There has been a significant increase in the number of people struggling with making repayments, which means many will have damaged their credit ratings and now be seen as being sub-prime by lenders," said Francis Ghiloni from the firm.

"This means that lenders will either decline to offer them a mortgage or only provide one at a much higher rate of interest," he added.

Many lenders have already increased the rates on some of their products but it is the tightening of lending criteria that is set to hit borrowers on short-term fixed-rate deals hardest.

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