How the pendulum swings
It doesn’t seem that long ago since the number of ‘specialist’ sub-prime lenders was a growing breed attracted by the high margins that could be made from ever more risky lending. A few of these lenders broadened their portfolio to spread the risk, but those that didn’t have been disappearing faster than the light evenings. In addition, those traditional lenders who offered sub-prime, or high LTV and income multiples have also withdrawn rather hurriedly. So the pendulum has swung from what some would argue was a reckless lending policy, to what may now be the other extreme.
With sub-prime interest rates on the increase, the inevitable repossessions are following. Who is to blame, the borrowers who should have known better, or the lenders who have been accused of ‘jumping on the bandwagon’. The real problem is that the effect will resonate into the wider economy – even the Chancellor is scaling down the growth expectations for UK plc. The pendulum will eventually return to a more considered central position – in time… but will the situation be repeated in future? The age old lesson of ‘if it looks too good to be true it probably is [was]’ will probably resonate in a few lender board rooms – for while at least.
Written by Mark Thelwell - Visit Website