Britain next for a sub-prime crisis?

There were fears today that Britain could be next in line for a crisis in the sub-prime loans market. Last week UK lender Kensington announced that it was temporarily pulling out of the mortgage market after earlier cutting loan amounts and raising interest rates for some new customers. The biggest concern is over the bulging numbers of cash-strapped house buyers who have not taken out investments alongside their mortgages to pay off the capital they have borrowed. Without an investment, borrowers face having to find a large sum at the end of their mortgage terms. The latest figures show that in June this year, 21pc of first-time buyers used an 'interest-only' loan where the lender had no knowledge of any matching savings deal.
A further nine per cent of first-timers had an investment plan, Associated Newspapers-owned This Is Money Website reported. In mid-2002, only five per cent of loans were made to new entrants to the property market without a plan to cover the final sum.