It seems that rising interest rates have had little impact on the housing market in the UK as the British Bankers Association showed that mortgage lending in July 2007 increased by 13.6 million pounds. The figure is almost exactly in line with the last six months average of £ 13.7 million and represents a slight increase in June increased by 13.1 million pounds.

The increase in July is not what the organization hopes to BBA statistics director David Dooks admitting that the increase was “surprising” following the accumulation affect the interest rate increases of the past. He added: “The steady growth of mortgage lending in the UK despite five increases in interest rates reflects the popularity of home ownership,” but Dooks also noted that much of the total figure could advance be back to business as the housing mortgage rate fixed stamp refers to minimize the impact of interest rate increases.

These increases in the last five years have led many homeowners due to the current fixed rate deals expire frantically compare mortgages currently available in the market in an effort to find one that will ease the rate increases. Homeowners with a mortgage of 100,000 pounds at present relates to fixed rate from two years ago, could face a monthly increase in the region of £ 200 per month if they were to move to the standard variable rate, so therefore the need to find a discount or fixed rate remortgage is proving fairly critical for many families. Immediate need for what most experts believe are driving the current boom in the mortgage.

The Council of Mortgage (CML) recently announced that total gross mortgage lending reached a new record for the month of July, amounting to 34.4 million pounds, reflecting the trend in the BBA figures. CML easily attributed to the buoyancy effect remortgage market and not wait until autumn figures as high. Despite this, the CML are still predicting a record £ 360billion of mortgage lending for the year ended 2007. That is due, in part, at least in the fact that more and more fixed-rate mortgages are due to return to standard variable rate in the coming months.

However, the Royal Institute of Surveyors (RICS) has indicated that the recent volatility in global markets, including the collapse of the sub-prime market in the U.S., will lead to more expensive deals with fixed interest rate and will have an impact on household finances. Chief economist Simon Rubinsohn of the organization warned: “With 90% of borrowers now opting for fixed-rate concerns, which are already financially stretched will be paying a high price for its tranquility.”

Thus, although mortgage lending is still at record levels, mainly because the owners of the search for new fixed rate remortgage deals. It seems that the interest rate increases to slow the economy are having the desired effect, even if it takes time to work its way through the system.

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Shake companies in sub-prime lending market in the U.S. and the United Kingdom before exposing problems that consumers have faith in lenders. Many assume that if approved for a loan or mortgage it means that someone responsible felt they could afford it. Nothing could be further from the truth.

Consumers are wrong about the reasons for many lenders, particularly sub-prime lenders to extend credit to people with less than perfect credit. Lenders are the companies that make money from the loans on behalf of others. An average loan officer is not a financial planner, and provides financial advice. They are trying to get your application check all the boxes must be approved by the mortgage lender so the broker may charge a commission for finding you and generating loan.

The issue of affordability barely enters the equation when approving a loan application. With lenders offering no documentation or self-certification loans may be surprised when a consumer can bend the truth a little in order to obtain the money they think will save a difficult financial situation or the house they want.

The loan authors sell their loans to a loan company that often a package of loans and sell them together in the food chain. It is not unusual for a new loan to go through two or three hands until the land in some bigger fish stock lending.

During the stage where the hope that a sub-prime loan is subject to a review of adequacy what actually happens in many cases is that everyone is looking the other way. The borrower is a little dodge numbers, the lender is pushing the envelope a little bit of everything and is pushed upstream.

Currently in the United States a kind of crisis is brewing in the mortgage market with sub-prime loans going bad faster than milk in the sun. In 2000 approximately 3% of loans originated in the U.S. sub-prime mortgages. In 2006 that figure was only about 13%.

Over the past six years lenders have smelled blood in the water and tried to exploit an area of the lending market which it believes are a lot of money. And I think they were right, if the U.S. economy remains strong and growing.

But with the housing market cooling and loans originated in the last year or so bad going as fast as they are written, some lenders have enjoyed strong growth in the sub-prime market, are finding that up to 19% of the loans are delinquent and in default.

And now, some of the lenders after the sub-prime market have been found insolvent. Waves of these small companies have gone bankrupt, with no fewer than 22 last week to seek protection through bankruptcy.

What makes this situation particularly frightening is that many of these new loans are originated or adjustable interest rate loans and interest rates creep even a little, many are in a situation where they are losing their homes.

The lesson to be learned from this story is that consumers should not rely solely on the approval of a lender. Must ensure that the proposed monthly loan payment will fit within the budget with room to spare.

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