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The subprime mortgage in the United States has been the subject of numerous new articles and even more commentary by members of broadcast media. The implosion of credit markets worldwide are considered to be the results of aggressive lending transactions in the subprime sector of mortgage lending.  Subprime mortgages are a type of loan made to borrowers with credit scores that are below average and a credit record that reflects some financial irresponsibility.  The same aggressive lending practices may be about to stimulate a mortgage bonanza in the most unlikely of places – Africa!

The current subprime crisis which could be accounted for by the liquid status of the financial market is also due in part to the billions of pounds in mortgages to individuals who had little or no chance of ever making repayment on such home loans. Financial institutions felt they were in such a bind during the period of recession in the 1990's and 2000's they made the choice to lower their standards in their lending practices. At that time, lenders had a surplus of money and were trying to devise new ways of marketing their finances to home owners and even to the first time buyers.

This is how lenders eventually got to the point where they were adverse credit mortgage products to almost anyone who applied. Subprime mortgage were not the only loan products available at the time and while they may have triggered the crisis and collapse of the global financial markets they were not the only contributor.

Though financial analysts squarely blame the lenders for offering mortgage products to people with poor credit, the fact remains that surplus liquidity also played a role. Of course, the crisis surfaced because of the mortgage loans to people with poor credit. Today, 10 years after the actual foundation of the sub prime problem was laid, the same credit or liquidity conditions that existed in the US prior to the crisis, are now present in the sub Saharan African nations. Biggest banks here have too much cash on their hands. So is it going to result in mortgage boom in the region?

But the African residential mortgage markets, unlike the US and European markets are far from being fully developed. In these most of these countries only a small minority of the residents have a bank account or use any type of banking facility, let alone have a mortgage. In these markets the residential mortgage loan exclusive and generally only available to the upper class. But now there is a growing middle class demographic with the desire for home ownership.

Fortunately it's unlikely that African banks will need to market any type adverse credit or subprime mortgage products. Since most Africans simply do not have a credit history and therefore do not have impairments to their credit history. Their loans can be underwritten using standard conforming guidelines.  In these countries it's customary for mortgage repayment to be paid directly to lenders from the borrower's employer. This reduces risk to the lenders and results in the borrower getting a lower interest rate.

Sub-Saharan Africa is an unlikely beneficiary of the global subprime mortgage crisis, as lenders are looking for new markets to develop and offer mortgage products. As it will be many years before the Western residential markets are fully repaired Africa could be dead center in many bankers lending plans.

Tags: banking, bonds, credit, Finance, homeloans, Loans, money, mortgages, personal finance, property