More than three quarters of brokers (79 per cent) said their clients are aware an impaired credit history can cause them problems with getting a ‘prime’ mortgage and even more (86 per cent) of them say their clients understand a near-prime or non-conforming mortgage will enable them to get on the property ladder and help rebuild their credit profile.
The research also reveals the top two reasons for clients to opt for a non-conforming or near-prime mortgage are if they have defaults on debts, hire purchase or credit card payments (66 per cent), or a poor credit rating (32 per cent). The kind of clients who are most likely to need a near-prime or non-conforming mortgage are those who are low paid, basic rate tax payers according to four of ten brokers (41 per cent). Another 39 per cent of brokers find it is most likely to be the self-employed who have an erratic income.
Eight out of ten brokers believe the non-conforming market will continue to grow in the next two years with 19 per cent thinking it could increase by more than 20 per cent.
In fact, 76 per cent have already seen a rise in demand, with clients looking for loans in the non-conforming (52 per cent) and near-prime (48 per cent) markets.
Mehrdad Yousefi, head of intermediary mortgages at Alliance & Leicester commented: “It comes as no surprise that brokers are seeing an increase in the number of near-prime and non-conforming cases they are dealing with. This market is becoming increasingly competitive with more lenders offering these specialised mortgages. It is encouraging to see that brokers say their clients know the value of these type of mortgages and that it is a good way of getting potential buyers on the housing ladder while enabling them to repair their credit history by maintaining regular payments on their financial commitments. Our research indicates that this market will grow and grow in the future.”
