Sub-prime mortgage lender Kensington Group has issued a profit warning and says its chief executive is leaving. It says that increased competition in the sub-prime mortgage market will hit profits in the coming years.
Sub-prime lenders provide mortgages for people with lower credit ratings and unusual employment situations and tend to charge higher rates of interest.
Earlier this month, problems at the US sub-prime lender New Century contributed to falls on global markets.
The problem at New Century was an increase in bad debt, as rising interest rates have left many borrowers struggling to keep up with their payments.
Bad debts
Kensington revealed that 9.8% of its borrowers were more than 90 days behind with their payments at the end of February, compared with 9.1% in November.
Kensington says the increase in arrears is down to seasonal factors and points out that the level is still below February 2006's figure of 10.5%.
The group is now expected to miss profit forecasts of �80m in 2008 and �90m in 2009.
The board has launched a review that it says "will result in increased focus on the specialist mortgage market in the UK and Ireland".
As a result of that, the chief executive John Maltby has decided to step down.
The review may also lead to the company being sold.
The group has confirmed that it is in talks with "a limited number of parties" but stressed that they might not lead to a deal.
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