Extent of Scottish subprime home loans revealed

Published on Wednesday 1 October 2008 22:45

MORE than 21,000 householders in Scotland have been given subprime mortgages in the past three years, according to figures released yesterday.

North and South Lanarkshire and North and South Ayrshire had the highest levels of subprime mortgages in Scotland, with Shetland, Orkney and the Western Isles having the lowest levels.

The subprime market in the United States – which has seen lenders authorise mortgages to people on low incomes or with poor credit ratings – has been blamed for playing a large part in the credit crunch.

The subprime market in Britain – loans given to those with impaired credit ratings – has always been smaller than in the US, but yesterday's figures show it represents 3.4 per cent of the total.

Those with impaired credit ratings have either defaulted on a loan for three months in a row in the previous two years or been declared bankrupt.

A spokeswoman for the Financial Services Authority said the industry regulator was not opposed to subprime mortgages, as long as the lenders adopted a sensitive and flexible approach to chasing down arrears.

Stewart Maxwell, Scotland's housing minister, said: "The Scottish Government would discourage borrowers from taking on unsustainable mortgage commitments and to seek help from their lender if they are having trouble repaying their mortgage."