Survey of Sub-prime Borrowers: Results and Recommendations

By: Catherine Davie and Nicola Hughes  Published: May 2009


This survey aims to understand the current experiences, attitudes and expectations of sub-prime borrowers. It explores how they are managing their mortgage payments and reviews their experience in contacting and negotiating with their lenders about payment difficulties.

Summary

Of those sub-prime borrowers surveyed:

  1. 22 per cent are struggling or falling behind with their mortgage. The main reasons given for falling behind with payments include increasing costs, problems managing debts, reduced working hours and unemployment.
  2. 40 per cent have borrowed money in the last six months to help cover their mortgage costs, with 29 per cent borrowing on credit cards, 14 per cent borrowing money from friends and 9 per cent taking out loans.
  3. Of those falling behind with their payments, a fifth (19 per cent) reported that their lender had not been in contact regarding payment difficulties.
  4. Of those who had contact from their lender, 38 per cent rated their lender‟s willingness to renegotiate a new payment plan as very poor/poor, compared to 27 per cent that gave a good/excellent rating.
  5. Of those who had been contacted, 25 per cent said their lender was unwilling to negotiate with them about mortgage repayment difficulties and 11 per cent said they could not meet the terms of the suggestions put forward by their lender.
  6. 18 per cent of respondents are on fixed rate mortgages that are coming to an end in 2009. However, a quarter of them do not expect payments to go up, a further quarter have not considered the issue and only 9 per cent have budgeted for an increase in payments.
  7. 27 per cent of all respondents expect a significant reduction in their income in the next six months and 36 per cent said that if this did happen, they would be unable to fully meet their mortgage payments each month.

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