Robert Sinclair, director at AMI, said: “The risk appetite of lenders needs to return to a more balanced approach.
“Whilst acknowledging that with limited availability of funds, lenders need to apply criteria that provide them with quality portfolios, there are a number of people who can afford a mortgage but who may be excluded from the current market because of a blip or two on their credit history file.”
Sinclair said young first-time buyers who have scraped their deposit together and been able to evidence affordability were falling at the last hurdle having been late with a couple of credit card or mobile telephone payments.
“These are not great indicators of risk but currently have a disproportionate impact,” he said. “Consumers need the industry to take a more mature approach.”
Currently there are few lenders who will consider a borrower without a perfect credit history and the mainstream lenders say they will not accept near prime customers.
Some of the smaller lenders including GE Money Home Lending, Precise Mortgages and various regional building societies will consider so-called “near prime” borrowers.
But brokers are crying out for lenders to be more flexible.
Mike Fitzgerald, sales director of Essex-based Emba Group, said: “The recent sub-prime crisis was not caused by somebody who had one late payment on a mobile phone.
“Lenders must now realise that by taking a mature business approach to help these clients the market will start to move to everybody’s benefit.”
And David Hollingworth, head of communications at London & Country, said he believed everyone would be keen to see efforts to bring common sense and some flexibility to lending decisions where the customer can demonstrate a good case but may have a minor blip in their past.
He said: “Clearly those who have erred on a number of occasions will still find life very difficult but for those with very minor issues that have been quickly remedied it would be good to see lenders look for a way to approve a case.
“Some of the specialist lenders and smaller building societies are already attempting to bring a more personal touch which will hopefully encourage others.”
David Sheppard, managing director of London-based broker Perception Finance, agreed with the AMI’s sentiment but acknowledged lenders have a finite lending appetite at the moment.
And he added: “They will prioritise this to those without any missed payments on existing credit.
“It will be down to the smaller and newer lenders to pick up this market share and although this can mean a higher rate of interest, with rates being historically low this can still mean a lower payment than renting for those looking to get on the ladder.”
Rob Killeen, director at Capital Fortune, said it was easy as intermediaries to say that lenders should take a more balanced view.
And he added: “However, the fact is any blip even with good reason, remains a financial management issue and from a risk perspective, there has to be a greater probability of those who have had a blip having another, when compared to mortgage applicants who are blip-free.
“A one-off blip may not be a great indicator of future repossession but has to still provide a significant indicator of future conduct based on past performance.”
Meanwhile Dale Jannels, managing director of AToM, said his business had seen a marked increase in demand from first-time buyers with an element of impaired credit.
He said: “Mobile phone providers and utility companies are quick to record if you delay or miss any payment due.
“But this minor offence will tend to shut the door of opportunity from all high street lender credit scoring systems.
“The smaller lenders may still assist but will probably require an increase to an already stretched deposit which may halt the first-time buyers’ first step on to the property ladder all together.”
Alan Cleary, managing director of Precise Mortgages which offers a range of near prime mortgages, said he agreed with Sinclair but feared it will be a long time before lenders’ credit risk appetites return.
He said: “What tends to happen in a downturn is an over correction not just in risk appetite but also pricing and unfortunately we are at the point where the pendulum has swung too far.
“In the mean time specialist lenders like Precise Mortgages will plug some of the gap but it is a bit like the little Dutch boy sticking his finger in the Dyke!”
John Wriglesworth, managing director of The Wriglesworth Consultancy and an expert on the mortgage sector, said there was a need for more near prime lending but it was unlikely to materialise this year.
He added: “Too many people who can easily afford a mortgage are presently denied the chance due to a minor blemish on their credit history.
“Lenders need to show flexibility here and resist regulatory and risk adverse insecurities to restore this market.
“Without vibrant first-time buyer demand and the resurgence of near prime lending, the UK housing market will not return to full health.”
