Credit crunch is a term that was originated in August 2007 and has come about as a result of impaired credit lending in the US. It now means that each (re)mortgage applicant will be assessed more carefully and it seems that there are now a more obvious number of types of applicant with credit problems. You may feel that you don't have any impaired credit but just want to find a good
non status remortgage.
If you know that you've had issues then perhaps an
or so called
bad debt remortgage
would be a good option.
The ' credit crunch ' is essentially a flight to quality by the lenders who want to make sure that the business that they write is solid and that the borrowers are actually worth something.
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The issue that's come to light in the United States is that the euphemistically so called 'sub prime' market, actually has meant that borrowers have turned out to be very credit poor.
Here's what Kate of get-your-best-mortgage-rate.com says about
sub prime lending,
how it came to be and what it now means to most Americans.
This 'risky shift' concept had begun to make it's way to the UK (eg Northern Rock) and therefore, lenders are now being more careful as to who's borrowing. The resulting credit squeeze now means that the lenders are putting their own borrowing houses in order.
The implication is that all the loans and mortgages that have been secured by the assets are now in a position where many borrowers don't have income enough to repay the debt.
As a result the assets potentially need to be
repossessed and the fear is that too many repossessions will flood the market making the property market a buyers market. Properties could be bought perhaps for half price where the lenders endeavour to recover their money, triggering a collapse in property prices. The logical thing to do here is for the lender to encourage the borrower to maintain their payments and protect the market, otherwise, this is spoilt for all. The knock on effect in the UK (America sneezes, the UK catches a cold syndrome) is that this could happen here too..
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