UK Banks Pay Borrowers $41K to Refinance Elsewhere

Deleveraging remains one of the greatest concerns about a co.’s financial outlook. Which is probably why the measure has leapt into view with a vengeance that perhaps few had expected. The following article talks about banks in the United Kingdom taking debt-unwinding to a whole new level. They are paying homeowners cash to take their business elsewhere:

From DailyMail: Struggling mortgage firms are so desperate to offload borrowers that they are offering to write off a sizeable chunk of customers’ home loans if they move to a rival bank.

In some cases, tens of thousands of pounds are being paid off to give customers a better chance of finding an alternative lender willing to take them on.

The offer is being made by some of Britain’s biggest mortgage firms who are willing to take a hit of as much as £25,000 to get the loans off their balance sheets to see them through the credit crunch.

They gave out billions of pounds of high-risk sub-prime and buy-to-let loans during the housing boom but now want capital quickly, resulting in the extraordinary offer.

Events of the past several q’s have made it brutally clear that excessive levels of leverage continue to exercise significant downward pressure on asset prices and consequently negatively affect banks’ balance sheets.  By  the way, among the lenders offering the deal is GMAC, part of General Motors.

emphasis added

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