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Borrowers on sub prime mortgages face huge rate hikes of more than £350 a month.

Accoridng to Moneyfacts the number of lenders offering subprime products has dropped from 36 in July 2007, to just 13 now. That means from 8,148 sub-prime residential mortgage products in 2007 there are only 1,252 now.

The website says many lenders realised a few years ago that there was an ever increasing number of people with blemishes on their credit files. Existing lenders added sub-prime products to their range and there was an influx on new lenders offering exclusively sub-prime mortgages - now these unfortunate customers are facing huge rate shocks.

Darren Cook, mortgage expert at Moneyfacts.co.uk, says: "Last year the market for sub-prime was so competitive that some rates being offered were only fractionally higher than standard residential rates.

“Now, as lenders continue to factor in margins for higher risk, sub-prime customers are paying the price with rates up to 2.75% higher than the same time last year.”

Moneyfacts says borrowers who were on a light level of subprime assumed that if they kept on top of their financial affairs once their deal ended they would be able to move to a much cheaper standard residential deal, but due to stricter lending criteria from prime lenders this isn't necessarily the case now.

Cook adds: "Of those that can't get a new standard residential deal, they will need to try and find a new sub-prime deal or have no alternative other than moving onto the revert to rate of their existing deal. With this rate currently standing at 9.43% this could prove costly. "Borrowers could be facing up to a £360 hike in their monthly repayments, which could be a step too far for the majority. As a result we are likely to see more people facing the prospect of repossession as more and more deals come to an end in the near future."

Despite the impact the credit crunch is having on finances, Abbey says it may actually be bringing us closer to our loved ones. Over a quarter of Brits have admitted that they are now less likely to break up with their partner as a direct result of the current economic climate.

Abbey has found that not only are people now less likely to buy a house or find a new property to rent, but a staggering 12.4 million people actually admit that they are reluctant to split with their partner for fear of facing increased bills, rent and general living expenses.

Its also men that are the most reluctant to go it alone, with almost a third admitting that they did not want to be single and face an environment of rising inflation alone. Sisters are happier to do it for themselves, though, with a quarter stating that they were less likely to split with their partner.
Matthew Timms, managing director of cahoots, Abbeys online credit card, says: "There are clearly economic benefits to being in a relationship, such as shared bills, lower rent and even reduced car insurance premiums. The cost of being single can extend to thousands each year, but with a little careful financial planning you needn't be tied to your partner purely for financial reasons."

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