An increasing number of people are seeking near prime mortgage products, according to a broker poll by Atom Bank.
Some 81% of brokers said they were seeing an increase in clients with adverse credit or who have failed traditional credit scores over the last 12 months, although this is a reduction from a similar survey in December, when 93% said they were seeing an increase.
Richard Harrison (pictured), head of mortgages at Atom Bank, said he believed there would be more growth to come in terms of near prime demand.
“That demand comes from both those making their first step onto the housing ladder, and existing homeowners coming off fixed rate deals and facing the prospect of much higher rates than anticipated as a result of the situation in the Middle East,” he said.
He added that the industry needed to ensure that it meets the need of near prime borrowers.
Harrison added: “With cost-of-living challenges continuing to feed through into borrower prospects, pushing more aspiring buyers outside of prime criteria, it’s crucial that the industry takes the time to better understand these borrowers and what they need in order to meet their home buying dreams.”
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David Hollingworth, associate director at broker London & Country, added that it is “crucial for lenders” to recognise the growing trend of near prime lending.
“Saving for a deposit remains such a challenge that there’s real benefit in combining a more understanding approach to assessing creditworthiness with a broader range of higher LTV options,” he said.
Near prime realities
Atom Bank has been a champion of near prime needs. Recently, David Castling, its head of intermediary lending, spoke to Mortgage Solutions about broker frustration over the way all near prime mortgages are grouped together.
He said a “more nuanced approach is needed”, as there are different reasons why people have this status, with some simply not having yet built a credit history at all, and others having had adverse events along the way.