83% of surveyed lenders declared steady increases in non-conforming mortgages for the year to date, with 17% stating that it has stayed the same. The actual average loan value across the major lenders surveyed has increased to £106,023 in April from £101,260 in January. The business increases are fuelled by increasing Adverse Credit, whilst there has been a flattening of First Time buyers active within the market. Right to Buy and Buy to Let products have seen small but steady increases over the same period.
The strong factors affecting the increases are cited by lenders as the after effects of Christmas spending starting to show earlier in the year, as consumers woke up to the cold realisation of growing debts that required consolidation through remortgage, which now accounts in the period to April for 56% of the total non-conforming mortgage market. The result of this is the declared increase in near-prime applicants for remortgage products. On the back of this the sector has seen a volume of new products being launched by lenders as they innovate and capture niches that are opening on the back of the current consumer climate.
Whilst growth seems set for the long-term, factors exist that are reducing the activity, the Buy to Let market has considerably slowed compared to last year. Broker activity within the sector that had slowed month on month following regulation as they came to terms with particularly the sourcing of non-conforming lending. The activity is now creeping slowly upwards again. According to the lenders the two main sourcing systems Mortgage Brain and Trigold simply do not source for the non-conforming sector effectively, and brokers who are largely not sufficiently knowledgeable about product availability and suitability for clients, have the choice of approaching a series of lenders, using a branded mortgage arranger or packager.
Keith Dearling Founding Partner of Advantage Home Loans - The Branded Mortgage Arranger, comments: “The results are no surprise as the market has been very flat since M day. Lenders and Brokers were all waiting in anticipation for the market to start to pick-up and here at last we have some indication that it is finally starting to happen. The cited problems with the sourcing systems can be completely overcome by brokers, Advantage will source for the brokers and also give full assistance with sourcing KFI’s."
Stuart Codling, Chairman of The Mortgage Point comments “ I am reassured that we are now beginning to see the market slowly start to pick up again and we are optimistic that this will continue.”
The Advantage Non-Conforming Index is the result of a monthly survey to Advantages Mortgage Panel Lenders active within the non-conforming mortgage sector. Compiled monthly the results of the survey are summarised above. The survey commenced in January 2005 and the findings relate to the period January 05 – April 05. This is the first release of the survey findings.
