Moneyfacts has predicted a blooming sub-prime market in 2007, but warns that customers need clearer classifications in order for them to embrace the products.
The predictions, made by a panel of moneyfacts experts, forecast more lenders entering the growing sub-prime market in 2007.
The panel also predicts a further rate rise in 2007, with 80% anticipating this will occur during Q1.
By the end of 2007, 20% of the panel expect the base rate to be 5%, while 60% predict 5.25% and 20% think it will be 5.50%.
Moneyfacts also believes a rate rise early in the new year will be the tipping point for many borrowers, and reminds consumers on a tight budget to take a look at their financial position and choose products that offer some protection against rate increases.