The sub-prime mortgage problem is not just limited to the US. Many other countries have embraced this lenient mortgages market at the time when real state prices were touching price bubble conditions. In the UK it takes the form of non-conforming mortgages, and people are now reviewing the state of this market.

Some of the UK sub-prime mortgage lenders are drawing from reserves to attend increasing delinquency rates. Southern Pacific and Rooftop Mortgages are two of these non-conforming lenders that have been touched by 90 days arrears (debt which is overdue after missing an expected payment). These two companies are owned by Lehman Brothers and Bearns Stearn respectively, two investment banks that seems to hold a large amount of mortgage backed residuals in the US. Hence the usual suspect have been touched.

People claim that the non-conforming mortgage market in the UK has not been as sloppy as in the US. In the UK the equity stake in half of the loans has been generally over 20% (in the US borrowing 120 % of the value of the house was not strange). However, this might mean little if the bubble run has been higher in the UK. You borrow less in a more overinflated market. Still Britons are drawing cash out of their houses (home equity) and this can lead people into trouble when the value of the collateral decreases. It all can roll together: lower home equity, lower consumption, higher unemployment, worse loans…