I've written abut the US Sub prime mortgage crisis previously and more generally about sub prime mortgages. Now as the current financial correction is being blamed on it, it is time to revisit it.What happened?
US banks lent money when interest rates were very low to people who would maybe not normally get mortgages. Some sections of the press have dubbed them "trailer trash" hinting that the relatives of Britney Spears could cause economic meltdown.
Ok, some US banks have bad debts...how does this affect the UK & Swindon?
Banks buy debts form each other, some UK & European banks have taken on these debts. UK Bamks are being coy about how much of these problem debts they took on.
Stock markets are jumpy at the best of times, during August many dealers are away on holiday so small scale sell offs have had a larger impact.
What now?
The US federal Reserve stepped in to help US banks which calmed the fears.
What should I do?
1 Sit tight, corrections happen all the time. Banks like HBos (Halifax bank of Scotland) are sniffing aroung the US mortgage market looking to pick up bad debts and make a killing. Derive your own conclusions
2 Speak to your financial adviser, they should know more than the Sun or Daily Mail. I have one or 2 recommendations myself...
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