Near Prime
Prime Time for Near Prime
There are products available to brokers that have been designed to meet the needs of borrowers who had previously been served by high street lenders but, as a result of the credit crisis and the resultant tightening of lending criteria, now find it difficult to secure a mortgage
by Alan Cleary, managing director, Precise Mortgages
Whilst there are no official stats available to size the near prime market one can make an educated guess based on the available information and some assumptions. What we do know is that total UK
personal debt stood at £1,452billion at the end of 2010, approximately £1,240billion is secured on residential property with the remaining £212billion on consumer credit such as credit cards, personal loans and overdrafts. According to CML statistics there are 11.36 million mortgages outstanding and there are nearly as many credit cards as there are people in the UK according to the BBA, that’s a staggering 60 million bits of plastic occupying our wallets and purses. Clearly, the demand for credit exists
and we can see from these numbers that a large percentage of the population will continue to need credit for the foreseeable future. The recession has had a significant impact on the credit profiles of many
44 morTgage iNTroducer MARCH 2011
ordinary borrowers who would have been considered prime a few years ago but now are left in no-man’s land. Consider the following: an estimated four million people missed at least one credit card payment in 2010; 1,716 consumer CCJs were issued every day between October and December 2010; some 2.1 million people have had a CCJ issued against them in the last three years; around 240,000 people are currently in arrears of up to three months on their mortgages
and a larger number will have missed a mortgage payment in the last 12 months.
RaisiNg caPital From a credit perspective it easy to see that potentially millions of borrowers will find it difficult to secure a mortgage with a high street lender and in my view a large percentage of those borrowers will believe that they have no hope of getting a mortgage, indeed until fairly recently
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