Some say the U.K. is a warning to the U.S. but the news sounds about the same. One third of all U.K. homeowners will face big increases in their house payments. A report released yesterday said approximately 5.5 million people in the U.K. would be effected. Many fell into the subprime trap because of divorce, employment issues, or other unforeseen financial issues. While the U.K. classifies adults as ‘non-standard’ the United States also faces many subprime and ALT-A problems as adjustable rate mortgages reset. The United States classifies the problem as ‘subprime’ but analysts say the analogy no longer holds up to examination. Here is why:
“Subprime suggests people with less than stellar credit caused the credit crunch around the world. Such a classification, and total volume of of subprime losses suggest a much bigger problem” said Household – HSBC Watch.