Posted on: 24th Mar, 2010 08:31 am
The financial crunch gulped down a large number of companies, leaving many out of work and unable to pay debts. Many well known banks incurred large debts and huge liabilities, so large that even the Government was unable to give them a helping hand. Chances of getting a loan with a good credit standing plummeted down to somewhere near impossible, leaving no room for those who had their figures less than 650 at the Credit Ratings Scale.
It was assumed that companies issuing loans to people with debt problems would soon succumb to the crunch. But almost a year and a half has passed and this so-called subprime lending market is safe and sound. Reason for their survival – the discontinuation of subprime-lending by big banks.
With plenty of subprime lenders in the market, the mortgage industry is still facing problems with gaining strength. Mortgage brokers say it is still hard for individuals with bad credit to get home loans. The subprime home loan market peaked in 2005. That year, nearly $625 billion were handed out to borrowers with low credit scores, generally below 650, whereas, only $4 billion were supplied to home loans in the same manner in 2009.
As more and more banks are tightening their credit standards, the subprime lenders have not only accelerated their business growth, but have also raised interest rates, since borrowers with low credit ratings have fewer options. Is there no way out for people who have low credit standings?, Why can't larger finance corporations opt for the same strategy as subprime lenders? Comments and opinions welcome.
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It was assumed that companies issuing loans to people with debt problems would soon succumb to the crunch. But almost a year and a half has passed and this so-called subprime lending market is safe and sound. Reason for their survival – the discontinuation of subprime-lending by big banks.
With plenty of subprime lenders in the market, the mortgage industry is still facing problems with gaining strength. Mortgage brokers say it is still hard for individuals with bad credit to get home loans. The subprime home loan market peaked in 2005. That year, nearly $625 billion were handed out to borrowers with low credit scores, generally below 650, whereas, only $4 billion were supplied to home loans in the same manner in 2009.
As more and more banks are tightening their credit standards, the subprime lenders have not only accelerated their business growth, but have also raised interest rates, since borrowers with low credit ratings have fewer options. Is there no way out for people who have low credit standings?, Why can't larger finance corporations opt for the same strategy as subprime lenders? Comments and opinions welcome.
[size=9:5ae1212d1d][color=Red:5ae1212d1d][External link removed as per forum rules. Thanks.][/color:5ae1212d1d][/size:5ae1212d1d]
Hi plotter,
I doubt if there are still any sub-prime lenders who would offer loans to those with bad credit. In fact, I doubt if the sub-prime lenders still exist in this market. Some of them may exist in certain areas, but it does not mean they are safe and sound and are accelerating their business growth.
I doubt if there are still any sub-prime lenders who would offer loans to those with bad credit. In fact, I doubt if the sub-prime lenders still exist in this market. Some of them may exist in certain areas, but it does not mean they are safe and sound and are accelerating their business growth.
As you noted, the major subprime companies are gone and they served a purpose, albeit a controversial one. Now the only options that people with less than perfect credit have are finance companies or private lenders (often called hard money lenders) both of which will charge fairly high rates.
There is a vacuum in the market for competitive subprime lending, it will be interesting to see how long it takes for the vacuum to be filled.
There is a vacuum in the market for competitive subprime lending, it will be interesting to see how long it takes for the vacuum to be filled.
there's no doubt that the hard money lenders are in full force, along with a smattering of finance companies. there's no doubt that people with challenged credit are going to have to pay a premium in order to obtain a loan, whether it's to a "regular" lending institution or to a private concern. i'm sure there are also private lenders whose offerings are less heinous as far as rates are concerned.
hi jenkin,
subprime lenders are also been badly struck, but still they are left with a strong customer base: more people have bad credit ratings. they just need to cater them in such a way that it turns out to be beneficial to the lender as well as to the borrower.
subprime lenders are also been badly struck, but still they are left with a strong customer base: more people have bad credit ratings. they just need to cater them in such a way that it turns out to be beneficial to the lender as well as to the borrower.
Everyone says there are ** some ** sub-prime lenders out there. What companies? I think the existence of subprime lenders in 2010 is an urban myth.
I agree with your kreno! There are hardly any subprime lender available in the market right now.
The market will stay slow until they start lending to people without perfect credit. i had a recvent B/K but we stall have 50% equity and a great track record but no one will lend money until 2 years afer discharge they must cahnge this rule or it will stay slow in !