Dave Pinnington, business development director at V Loans, said the business split between prime and non-prime applicants has completely switched round.
He said: “Last year the number of prime cases we completed was just 35% of the total. In 2012 we are seeing that prime cases introduced by brokers have grown to over 60% of all our applications. It is very clear from this evidence that the effect of the removal of the interest only option by many first charge lenders and the difficulties in remortgaging for capital raising purposes, not to mention the hurdles that need to be jumped to obtain a further advance, has led to the influx of enquiries we are now seeing from prime borrowers who would normally have used the remortgage route.”
He added: “Of course, the increase in competition among lenders in the sector for this type of business has led to rates for prime employed applicants starting at 6.90% and 7.90% for the self employed. All these factors add up to a very strong case for the value of the secured loan to borrowers needing to raise money.”
Robert Sinclair, chief executive of the AMI and AFB, added: “Lenders in the first mortgage market have tightened their lending criteria considerably in the last couple of years. In addition many have aligned their underwriting with some of the more extreme of the MMR proposals, which were never likely to see the light of day. This background combined with continuing liquidity issues in the market means that many creditworthy individuals are struggling to get a further advance from their existing lender or obtain new funding. This provides a great opportunity for the second charge market to support good applicants.”
