Do sub prime lenders have higher interest rates?
A sub prime mortgage lender will typically have a higher interest rate than a standard high street bank or building society lender. The reason for this is simply to reflect the greater risk for the sub prime lender when lending to impaired credit clients. There is also a difference is how the rate is calculated, sub prime mortgage lenders will typically use the LIBOR rate (London Inter-Bank Offered Rate) as a base for interest rates which is different to the Bank of England base rate that most high street lenders use.
