The bad credit mortgage market is still as unstable as ever, even though the housing crisis has been going on for months. Experts that predicted that the summer months would bring a turnaround are left scratching their heads. According to a new report released by the Bank of England, the state of the bad credit mortgage and housing markets is not good. Although many had hoped that the markets would begin to stabilize, a combination of factors has prevented this from happening. Although bad credit mortgages are risky, they are still a large sector in banking and by cutting back on these loans, banks are starting to feel the pinch in many ways.
“At the moment it’s hard to point to any indicators that the mortgage market and the housing market are stabilizing,” said Simon Hayes, an economist at Barclays Capital in London.
“The impact of the tightening in terms of availability of credit could prove greater than is embodied in the central case in our most recent set of projections,” Deputy Governor Charles Bean testified. A “more persistent” or “more pronounced” slowdown may lead “inflation to undershoot the target in the medium term.”
Related reading: Bad Credit Mortgages
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