Increase in non-conforming rejections

Advisers are undoubtedly having a tough time in the current market.

When asked whether any cases submitted over the past four weeks had been declined when previously they would have had them accepted, 70 per cent of brokers admitted that this was indeed the case - an increase of 34 per cent since the beginning of September.

While in the first round of research no adviser had more than 50 per cent of their non-conforming cases rejected, by October this had increased to 26 per cent, indicating a real hardening of criteria and overall market conditions.

Further results to come out of the research included:

• 70 per cent of advisers, compared with 55 per cent in September, now expect to lose more than 10 per cent of their sub-prime business due to the repricing of products.
• 77 per cent of advisers, compared with 65 per cent in September, expect to lose more than 10 per cent of their sub-prime business due to changes in lending criteria.
• 'Changes in lending criteria’ is now cited as the biggest issue for 80 per cent of advisers in the current sub-prime market, compared to 62 per cent in September.
• 38 per cent of advisers now feel that the current sub-prime situation will result in them changing the product sectors they focus on with prime mortgages, buy-to-let and secured loans being the main areas under consideration.
• 63 per cent of respondents said that the current problems in the sub-prime market would lead them to source products from lenders that they would not normally deal with. In September 10 per cent of respondents said a visit to Mortgage Business Expo London would help them by meeting substitute product lenders; by October this figure had risen to 39 per cent.

Daniel Nwaokolo, Mortgage Business Expo London, show director, said: “Benchmarking the results of our two recent surveys into the current sub-prime market has revealed advisers and their clients are having to deal with a hardening of market conditions.

"The subsequent impact on adviser’s ability to place cases is becoming ever clear. The number of cases, which would previously have been accepted but are now rejected, continues to increase and advisers are clearly having to look for new lender and provider partners to conduct business with.

“Ultimately, the tightening of lender criteria and product pricing means advisers are not only looking for alternatives in the sub-prime market but are also seeking opportunities in other product sectors."