July 4, 2007 (LPAC)--The U.K. Financial Services Authority (FSA) today warned of "serious wider consequences" if mortgage lenders continue expanding the sub-prime mortgage market in the U.K. Based on a review of over half the sub-prime lenders, some 11 firms, and 34 brokers, FSA Managing Director for Retail Markets Clive Briault put out a statement saying that "Poor sales practices in this market may lead to serious wider consequences." Different estimates put the U.K. whole sub-prime sector at 6%-8% of the whole mortgage market, and the London Telegraph reports that its overall scope is some 30 billion pounds (US$60 billion). U.K. consumers are burdened with an unpayable 1.3 trillion pounds (US$2.6 trillion) in personal debt, about 80% of that mortgage debt. The cost of servicing debt in Britain is the highest since 1992, and interest rates are expected to go even higher. Already, personal bankruptcies in the U.K. are up 24% over a year ago, Bloomberg reported today.

None of the lenders reviewed by the FSA had "adequately covered" all lending considerations in giving out mortgages. Over half the sub-prime customers had "self-certified" their income, even though the vast majority were salaried workers, and could be checked by the lender. Already five out of 34 sub-prime mortgage brokers are being investigated by the FSA enforcement division, and more may follow.