Are we heading towards another subprime crisis?

This article is part of
Guide to the return of subprime

“Signs that the risks are increasing would be property prices falling, larger than expected increases in interest rates, especially if over a short period, and/or sharp rises in unemployment.”

Mr Torpey suggests: “If there were ever signs to look for, it would be a relaxing in lending criteria, excessive growth, high LTV [loan to value] lending and increased arrears, and none of these are prevalent in the market today.

“Existing customers served by specialist lenders would not necessarily be impacted by a future crisis as they have a term commitment from their lender, but it is likely that the availability and cost of new products for new customers would be severely impacted.”

He predicts self-employed customers, who typically make up 30-50 per cent of specialist lenders’ loan books, are likely to be disproportionately impacted by any charges.