The credit crisis is hitting the UK Mortgage Sector hard as easy credit mortgage deals have been removed from the high street shelves in recent weeks. Despite the central bank actions to ease financing terms and increase liquidity, this does not address the real issues illiquid mortgage related bonds and expectations that the UK housing market crisis on the back of a wave of foreclosures.
UK Mortgage Banking Sector - Northern Rock on the verge of going bust
For example, credit crunches impact on the banking sector of the UK mortgage, we need look no further than the Northern Rock.Dionica mortgage bank rate has fallen from recent highs of £ 12.58 to recent low of just 6.20 pounds, which a drop of more than 50%. Trading in PE only 7.5 and the yield of 4% can now make a stock seem enticing, but the record in anticipation of a much higher risk of mortgage defaults and repossessions in the UK as the housing market starts to nose dive. These repossessions (foreclosures) are already hitting the likes of Northern Rock expected to triple the rate during the next 6 months compared with the same period last year. This surge in repossessions will impact the earnings of the UK mortgage bank as do an increasing bad debt provisions and issue profit warnings.
This is in addition to any toxic U.S. sub prime related exposure. Therefore, the Northern Rock case of PE of 7.5 could jump many times in the worse case scenario.

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