Each week, we also round-up the best comments, emails and letters to the site and pick one reader contribution as our Star Letter. This week’s award goes to:
Sub-prime lender slams ‘fast asleep’ mortgage brokers
Putting aside the issues of limited distribution channels, I am not sure putting someone on a current rate of 8.52% which is variable and only likely to go up is the best thing for any borrower.
This may be the only ‘last resort’ product in the market, but where the alternative is rent somewhere and let your credit naturally heal it has to be considered very warily indeed. I would need to see a large margin between a client’s maximum affordable payment amount and the monthly cost of a Magellan loan to create a decent cushion against rising rates.
Gilmour suggests rates on the sub-prime product will fall soon, but I bet this will only apply to new lending and the old 8% above Libor will remain for those who have entered the deals already. Gilmour also suggest brokers are ‘asleep’ to these plans.
Yes, I bet some are but they are probably sleeping comfortably at night, not worrying about whether they have inadvertently stitched their clients up like kippers.
Andy Wilson
