The fallout from the ongoing credit crunch has really hit Peoples Choice hard, pushing them to file for Chapter 11 in the US.
Peoples Choice are one of the many subprime lenders who have been riding the wave of second tier lending, that is to those who are a greater risk than normal, only to find the waves crashing over their heads as defaults and lack of extra funding leave them unable to continue.
The company has filed for Chapter 11 so they can take some time out to reorganise themselves and regain stability. During this time their creditors are kept at bay, thus freeing the organisation up to get their house in order and ideally come out better than before.
One of the biggest problems with subprime lending, and one that Peoples Choice will certainly have seen, is that a lack of affordability leads to lenders offering more and more money as an incentive to use them, with 120 percent mortgages not uncommon. The borrower relishes the extra money but often finds it has gone very quickly, the repayments are higher than they would normally have been and the value of their property does not cover the amount borrowed. A recipe for disaster as soon as house values stop growing at a high rate, which is what has happened in the USA recently.
A new range of Alliance and Leicester mortgage products has just been announced with flexibility built in to suit different customer needs.
There are different fixed term periods available, fee or no fee mortgages and also a base rate tracker. Some excellent rates are available, with a maximum loan of 75 percent of the property value enabling the Alliance and Leicester to offer these rates. One of the most popular mortgage options is expected to be the 2 year fixed rate with a 5.99 percent interest rate.
One of the Alliance and Leicester tracker mortgages that customers will find interesting is currently quoting a rate of 5.89 percent for the first 2 years, this is base rate plus 0.89 percent. After 2 years the tracker works at base plus 1.49 percent.
Halifax has just announced the eighth cut in their mortgage rates this year, with almost half of their mortgage products having their interest rates reduced by up to 0.15 percent.
A typical example is the Halifax 5 year fixed rate mortgage which comes down from a 6.49 percent interest rate to 6.34 percent. The Halifax has also cut fees on some of its products, with the recently introduced stepped tracker mortgage having GBP200 cut off the fee.
The mortgage market is seeing all manner of fluctuations right now, with the base rate and general economic climate leading mortgage providers to look at different ways to get customers on board. The Halifax is doing what it can by cutting rates and fees where they can and are hopeful that demand will increase on the back of them.
