Sub Prime Interest Rates

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Violet Rose

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Quick question - we are having a debate here at the mo ... someone said that subprime mortgage agencies are not linked to ECB and therefore interest rates are not coming down ...
If this is the case - if one does have mortgage with sub prime - do their interest rates keep going up or can someone clarify this ...
 
Violet Rose said:
Quick question - we are having a debate here at the mo ... someone said that subprime mortgage agencies are not linked to ECB and therefore interest rates are not coming down ...
If this is the case - if one does have mortgage with sub prime - do their interest rates keep going up or can someone clarify this ...
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Sub prime rates are usually linked to Euribor i.e. banks cost of funding. It is unlikely that any sub prime lender passed on the benefit from the recent rate cuts (at least not fully) but am open to correction.
 
i have sub prime, mortgage rate is 8.44% always went up with interest rates, and i can hand on my heart say NO we have not been passed ANY interest rate cut, not even 0.000001%
 
At the moment the sub prime banks have not passed on any ecb decrease except springboard mortgages who offered trackers up until 3 months ago - so any one who availed of the tracker option will see the decrease.
 
If GE Money have you over a barrel, i.e. you have a judgement, poor credit record etc it makes switching away from them virtually impossible. If you are self employed it is normally possible to switch to a mainstream bank after 6 to 12 months.
 
Sunny said:
Dear Lord. How do afford that?? Is there no way you can switch? I reckon there are money lenders down dark alleys charging less at the moment!
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These are crazy rates - in the credit card range, not usual mortgage range.
 
Subprime lenders have not reduced their rates yet due to no change in the EURIBOR as banks are still reluctant to lend to each other. We will start to see some movement in the next 2-3 weeks after which I will expect Subprime lenders to drop their rates.

I think it's in their interests to do so if they want to help out their arrears customers.
 
Apparently a representative from Start spoke on Newstalk 106 yesterday and confirmed they were to cut rates before Christmas.
 
Dave Vanian said:
I wasn't aware that sub-prime lenders had any great interest in helping out customers...
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They help by loaning to people who otherwise would not get a loan. If you manage to repay over about 2 years normal lenders will then consider you.
 
Here is a question,

If you secured your sub-prime mortgage by going self-certified and paid away quite happy for 2 years, will any of the high street banks consider you, if you can only self-certify your income!
 
If you falsely self certified your income and do not earn close to what you certified two years later then, obviously it will be unlikely that you can refinance to a mainstream lender. Thats the part that really baffles me - people start whingeing that they could never afford the mortgage in the first place but nobody put a gun to their head in the first place to sign their name to a lie!
In a situation where you could still only self certify, 2 years later but could afford the repayments in the meantime it would appear likely that the taxman isnt getting his fair share - no sympathy from me for such a borrower!
 
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Do you not have to produce your bank statements when you self certify, thought you did!

What if the taxman is getting all that he is supposed to be getting!

There is a lot of different people out there in very different circumstances!

Sub-prime lenders dont all have a bad credit history and they aren't all liars!
 
My understanding is that there is two ways you can self cert. One is through the verfication of annualised lodgments in bank statements and the other through loan statements where you have no activity in your bank accounts. This should show an affordability for the loan. I'm not sure if this has changed though. I'm out the mortgage game a few months.

Switching back to a Prime Lender in my experience is tough especially if self certifying. KBC passed a comment a few months back that of all the Subprime cases that were refinanced through them that 40% had defaulted hence I'd say it's pretty difficult to switch now. I think Bank of Scotland took self cert where they had a letter of serviceability from an accountant... not really self cert I suppose.
 
carrielou said:
Do you not have to produce your bank statements when you self certify, thought you did!

What if the taxman is getting all that he is supposed to be getting!

There is a lot of different people out there in very different circumstances!

Sub-prime lenders dont all have a bad credit history and they aren't all liars!
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I presume you mean sub prime borrowers in your last sentence. I agree, not all are liars but the whole point of self certing was to allow for a situation where a person was making a strong income in the year of application but had either no records or poor income for previous years - and hence being unable to satisfy a mainstream lender.
Two years later, this "strong" self certed income in the year of application should be fully verified by an accountants set of accounts and also by a tax return - if this is not the case then either the income was overstated by the applicant to begin with (lie) or the appropriate tax was not paid.
 
in my persnal case if you can prove you can pay 1850 a month, after TRS month in month out (us since Sept 07) you can defently prove that you can afford to pay a much lower mortgage in a Normal bank mortgage.
Looking at ours roughly we would be paying 1300 pm before TRS, so roughly 1k a month mortgage, big big difference to 1850 per month
 
Hi Elaine, yes I agree with you, intuitively if you are paying 1850 then you should have no bother paying 1000. The problem arises that mainstream lenders require income verification not payment verification to underwrite a mortgage. If they merely went on the basis that you appear to be able to pay but cant prove the source of the funds by way of accountants report/tax return then they cannot approve a remortgage and, in fact, it starts edging into the whole area of anti money laundering legislation
 
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