Sub-Prime Lender Pulls Mortgage Deals

Mortgages and Home

Updated on 16 December 2008 | 0 Comments

One of Britain's biggest specialist mortgage lenders has decided to withdraw its range of sub-prime mortgages.

One of the biggest players in the UK's sub-prime mortgage market is set to stop offering sub-prime mortgage deals this weekend.

In what it claims is a temporary move, Kensington Mortgages has decided to stop lending mortgages to so-called 'sub-prime borrowers', citing volatile market conditions as the reason behind the move.

It is also reducing the amount it will lend on buy-to-let properties from 90% of the property value to 85%. Similarly, self-cert borrowers will now be able to borrow just 80% of the property value, instead of 90%.  

Kensington, which only operates through mortgage brokers, was one of the first to enter the sub-prime mortgage market when it launched in 1995.

From Monday, the lender says it will shift its focus to its prime mortgage range, aimed at borrowers with good credit records, although it is reducing the amount it will lend them from 95% of the property value to just 90%. 

The move is a direct response to fact that investors aren't willing to take as much risk in sub-prime mortgage sector as they have in the past and could signal that Britain is slowly waving goodbye to easy credit, as mortgage lenders continue to tighten their criteria.

Only last month Moneyfacts reported that both the prime and sub-prime mortgage market were shrinking, with an incredible 4,371 less sub prime products available to borrowers -- that's a staggering 54% decrease when compared to products offered in July.

In addition, last month, John Charcol recently reported that some sub-prime interest rates were reaching double figures.

Sub-prime borrowers coming to the end of their fixed rates are therefore likely to face higher costs when they come to remortgage, and should consult a mortgage broker if they want professional advice.

More: Are We heading For A Sub Prime Mortgage Crisis? / Find A Better Mortgage Deal

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