Growth in the non-conforming market has overtaken the mainstream sector as one in four UK adults struggle to borrow from mainstream lenders despite the non-standard population being at a historic low, research by Datamonitor reveals.
Datamonitor estimates that 9.4 million people of working age in the UK would have been systematically refused credit by mainstream lenders in 2003. This is down by 600,000 on 1999 levels.
The research reveals that growth in the non-conforming mortgage market has outdone the mainstream market with non-conforming gross advances growing by 26% in 2003 to reach £31.6bn compared with growth of 22% in the mainstream sector. However, the penetration of mortgages in the non-standard population remains lower than within the population as a whole. Datamonitor estimates that at the end of 2003, just under 29% of non-standard households owned properties with a mortgage compared with 48.5% of mainstream households.
John Webster, business development director at non-conforming lender Preferred Mortgages, says: “Mainstream lenders are getting tougher with their credit scoring and processing to cut costs so it's not surprising a lot of people are still being turned down by them. You'll also find more sub-prime lenders are moving into the near prime or prime market which reflects the fact there are now fewer people with adverse credit.”