Wall Street crisis could threaten UK mortgage market
by Gill Montia
A crisis on Wall Street is likely to put further pressure on the UK’s frozen mortgage market, which had been showing signs of a thaw in recent weeks.
Over the weekend talks to rescue investment bank, Lehman Brothers, ended in disarray and the 158-year-old institution is today filing for bankruptcy protection.
The bank is a major underwriter of mortgage-backed securities which are now worth only a fraction of their original value because they contain toxic debt.
Banks worldwide are now assessing their exposure to the possible collapse of Lehman Brothers and credit markets could tighten further.
This weekend effectively saw the end of two world-class banks, as in addition to the collapse of Lehman Brothers, Merrill Lynch, the world’s biggest broker, agreed to be acquired by Bank of America.
The events could mean that the credit crisis will be longer and tougher than anticipated.
The repercussions are also likely to impact on the Government’s plans to relaunch the UK economy this autumn.
Lehman Brothers closed its Southern Pacific and Preferred Mortgages businesses in the UK back in March.
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Tags: crisis, Lehman Brothers, market, mortgage, UK, Wall Street
