An industry source told MI, although no launch date had been set, with plans still being formulated, the lender would be moving into the non-conforming sector in 2006.
James Cotton, mortgage specialist at London & Country, was interested to see what angle C&G would take when announcing its future plans to enter into this specialist sector. “It will be interesting to discover what proposition it will offer. The near-prime market has grown considerably and I would imagine C&G will look at this part of the non-conforming sector first. There are a lot of borrowers with one or two blemishes on their record that fall just outside of the mainstream deals. These borrowers do not have a high lending risk so, rather than go through the market, I expect C&G to focus on these customers.”
Thomas Reeh, chief executive of blackandwhite.co.uk, said: “I am not really surprised because margins are being tightly squeezed in the prime sector. The line between prime and non-conforming is becoming increasingly hazy and many of the discounted non-conforming rates match those of prime rates. ”
He added that the UK non-conforming sector would continue to grow with more consumers getting into some level of financial trouble that will stop them from getting a prime deal. “I would be very surprised if entering into the non-conforming market was not on the agenda for a number of banks and building societies this year.”
C&G declined to comment.
