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Sub-prime crisis warning issued

Tue, 04 Dec 2007

The Liberal Democrats acting leader Vince Cable has warned that the UK could experience a sub-prime crisis similar to the one seen in the US.

Mr Cable told BBC Radio 5 Live's Wake Up To Money programme that the country was "almost certainly" close to seeing a crash within the residential property market .

In such situations, banks often move "very quickly" to repossess houses from people who are unable to make their mortgage repayments and at present there is "no safety net at all", Mr Cable explained.

"I mean in the 90s, before that, you could go to social security and get some kind of help. A lot of people have not got any form of payments insurance," he commented.

The government and banks ought to work together to ensure that there is a practical "lifeboat arrangement" for mortgage holders who find themselves facing repossession, he added.

Julia Harris, analyst at Moneyfacts.co.uk, recently said that the sub-prime mortgage market has been badly affected by the global credit crunch.

According to the firm's research, there has been a 63 per cent fall in the number of sub-prime residential products available on the market since July this year.
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