The consumer is battening down the hatches for the long term. Borrowers with bad credit mortgages are all too aware of the predicament they are in.

Barratt homes told us this week that the Northern Rock factor has caused just a short-term blip in demand for housing, is this the usual riposte trotting out well rehearsed answers about supply shortages, rising population and high employment. Or is the bad credit mortgages fiasco got further to run.

What cant be ignored is that borrowers with bad credit mortgages have already stretched themselves to the limit on their finances. The sharp tightening up of lending by bad credit mortgages and loans companies over the last couple of weeks will lead to difficult times when borrowers come to remortgage.  

Bad credit mortgage approvals were down in volume terms during August compared to last year.

Northern Rocks emergency loan from the Bank of England has ballooned to an eye watering £7.75bn.

The lender has been criticised for lending above the value of the property which enables people to consolidate credit commitments. 100% mortgages & 125% mortgages are only lent to borrowers with a good credit record.

If borrowers had been more responsible in repaying their previous commitments, the more they would be lent compared with if they had not been prudent in not paying their past commitments. This is how its higher multiples of income have been calculated to offer the 100% mortgages.

 The 100% mortgages product seems to have held fast and the arrears on their mortgage book had not been extreme and therefore had not been the bone of contention or the Achilles heel.

The blame has been squarely placed at the feet of the American market.

According to the Nationwide the credit crunch has not stopped the growth in house prices.

 Nationwide’s figures showed an increase of 0.7% in September, October was 0.6%. Annual growth is now 9% to September down from 9.6% its lowest in almost a year.

 Nationwide’s chief economist Fionnuala Earley said that the credit crunch could trigger the “cooling of activity among stretched borrowers” that many analysts have been predicting.

The building society added that most of the slowdown in annual price inflation was down to the effect of recent Bank of England interest rate hikes.

Dont worrry there are many options for people trying to find a bad credit mortgage to suit individual circumstances.

 To establish how poor you bad credit is you would be wise to get hold of a copy of your credit file. This will provide you with a clear picture of your credit history. Armed with this information a broker will guide you through you options.

 Many bad credit mortgages are straight forward, always ensure you get a key facts illustration (KFI) and an initial disclosure document (IDD). These documents will outline any conditions and possible redemption penalties within the mortgage product you choose.

 Always make sure you pay bad credit mortgage on time and keep upto date with all other credit commitments. Within time you will repair your credit and hopefully be eligible for a hight street prime mortgage.

Todays topic of conversation in the mortgage world….bad credit mortgages. 

As the US sub prime market conditions or bad credit mortgages to us in the UK is in meltdown, the question is what are the implications for the UK?

Sub prime or adverse lenders are tightening their lending criteria.

This means increasing rates, reducing the amount you can borrow or the loan to value (LTV) which the lender will secure against your property. They will impose tighter risk controls effectively making it harder for you pass the credit scoring to secure your bad credit mortgage.