Paul Quinn stands among furniture piled in a second-hand store in Wallsend, a town in northeast England where about half of mortgages are subprime. Demand for the chipped tables and cupboards is accelerating, he says.
“One time you couldn't sell, and now they're all buying,'' said Quinn, 57, who minds the shop for Alan Booth Clearances, the local removals company that also sells items owners don't want. “People are coming in even to buy toys.''
Wallsend, which traces its roots back 1,900 years to a Roman garrison at the eastern end of Hadrian's Wall, shows the effects of the subprime infection spreading across the north of England. Asking prices for houses are falling and debt is surging. As wealth vanishes, people have less to spend on everything from food to home repairs.
“From what it was to now, it's just a slum,'' said Fred Peat, 65, who for three decades helped build oil tankers and warships at Wallsend's defunct Swan Hunter shipyard. The cranes are being dismantled and sent to India, girder by girder.
The north is home to Northern Rock Plc, the mortgage company bailed out last year by the government, and Bradford & Bingley Plc, the U.K.'s largest lender to landlords, which this month cut the price of a share sale.
An average house in the northeast sold for 127,581 pounds ($254,319) in May, the least among 10 regions of England, according to the Land Registry. What's more, prices fell 2.4 percent in the month, more than anywhere else.
The most expensive housing was in London, at an average 354,714 pounds. In the five metropolitan areas in and around the city of Newcastle, which abuts Wallsend, prices in May fell an aggregate 3.3 percent, the June 27 Land Registry report shows.
None in Street Sold
In the north, “when people suffer, they have less capital to fall back on than they do in the south,'' said Peter Dixon, an economist at Commerzbank AG in London who was born two miles from Wallsend.
Of the 50 areas with the highest percentage of people whose loans are subprime, 33 are in northern England and none is in the south, according to Experian Group Plc, whose data is based on credit ratings and homeowner profiles. Experian, the largest credit-checking company, says 48.5 percent of mortgages in Wallsend's parliamentary constituency are subprime.
Workers in the area around Wallsend earn, on average, 12 percent less than the British average of 448.60 pounds a week, according to North Tyneside council. Northern Rock as recently as February was selling mortgages valued at 125 percent of the home's value. Such loans have disappeared.
Opposite Wallsend's Citizens Advice Bureau, a charity that offers guidance on dealing with creditors, is Laurel Street, which runs 400 yards down to the boarded-up public baths. There are 10 “For Sale'' signs, three “To Let,'' and zero “Sold.''
Fish & Chips
Three row houses being sold by the Next2Buy local estate agency have had their prices cut payday loans. One three-bedroom home went up for sale in November 2006 for 125,000 pounds. After five reductions, it's now on the market for 104,950 pounds.
The asking price for a home in the north fell 0.9 percent between May 11 and June 14 from a year ago, on average, according to Rightmove Plc, Britain's most-used property Web site. The price rose 2.8 percent in the southeast.
Kuldeep Mahal, 50, who has owned the fish-and-chip shop in Wallsend's Laurel Street since 1987, said falling prices have left people trapped and cash-strapped. His trade has dropped off by about 20 percent over the past six months.
“People used to go out on a Friday and Saturday night and get food on the way back,'' says Mahal, who sells a cod and chips for 4 pounds. “Now they don't have the money.''
`Affects Poor Hardest'
Inquiries to the advice bureau about non-mortgage debt rose 46 percent to 34,441 in the year through April. The money involved exceeded 20 million pounds — the equivalent of 455 pounds for each of Wallsend's 43,905 residents.
“This is the effect of what you might call Britain's subprime lending,'' said Mark Almond, who runs the bureau.
Wallsend, the birthplace of the rock star Sting, is in the top 10 percent of the most deprived areas in England. Almond, whose clients typically have non-mortgage debt of between 10,000 and 30,000 pounds, says the subject is taboo.
“People often don't like to talk about it,'' said Almond. “Debt affects everyone. It just affects the poor hardest.''
At the Wallsend Boys Club, Garry Marshall, its manager, said he sees the crisis in the children.
`Bites With Youngsters'
Marshall, 44, helps get kids off the streets and into the green-and-yellow shirts of the club's soccer teams. It has produced 67 professional players since the 1950s, including former England captain Alan Shearer.
“It bites with the youngsters,'' Marshall said. “You saw kids who came here and had new clothes every few weeks. Over the last four to eight months, you don't see that anymore.''
At Alan Booth Clearances, a pair of army trousers for a three-year-old and a game of Mousetrap sit on top of a chest of drawers among the furniture stacked up in the store.
Quinn said there are few places worse off than Wallsend.
“I've seen people come here to buy second-hand furniture who said they'd never buy second-hand furniture,'' he said. “They can't afford to move.''
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