credit crunch

[DONNNAKEBAB]

can someone briefly explain to me in laymens terms what this is ? and how we are likely to be affected by it.

I have 3 mortgages all on fixed rate for the next 2 years, 2 credit cards, a salary every month (touch wood) and a mobile phone on contract.

I know this sounds really thick of me. But how is it going to affect us ?

Katie.x

[donn1901]

the simple answer is no its not going to affect you. i have a fixed mortgage for two years aswell. its just the ppl that are looking to remortgage or take out a new mortgage will find the increasing rates harder the banks are withdrawing deals! my financial advisor was here last nite and said its not as big as they are making out and that the press have took over hyou can still get good deals you need to be quick. basically if your looking now its the wrong time few months and you will be well away

[jake-the-peg]

This all started with the American "Sub-prime" mortgage market. These are mortgages to riskier customers. Basically banks taking too much risk and thn turning around and finding that more people than they thought were defaulting. Consequently they were suddenly worth a lot less than they thought they were.

The banks don't know who's lost out by how much so they're very jittery about lending money to each other - hence Northern Rock.

Also the "sub-prime" market in the UK is affected. People can't get 100% mortgages any more and have to pay much more for higher percentage mortgages. This is damping down the UK housing market ( which as you have 3 mortgages will probably affect the value of your properties)

If the value of your properties falls too much compared to the equity you have in them, you may find it difficult when your 2 year deals run out. The mortgage lenders won't forget this quickly!

It really all depends on how much you owe compared to how much your assets are worth.