MS Leader: The realities of near-prime

An increasing number of lenders have come to the market over the past year with products for borrowers with impaired credit.

Whether you call it near-prime, specialist or intelligent underwriting, it amounts to the same thing. After the turbulent period many people’s finances have gone through in recent years, there’s clearly big demand for it. That said, anecdotal evidence from some of the lenders has been that take-up is low.

For the right client high street lenders are willing to overlook the occasional blip, but another barrier has been brokers.

When Mortgage Strategy polled its readers earlier in the year about their views on near-prime, many were clearly ambivalent towards the sector. When we asked how they would describe their motivation to handle near-prime cases, the majority said low – not a great sign.

Part of the reason behind this could be fear of the Financial Services Authority – some 63% of respondents said they were concerned about the regulator’s views on the sector.

But as Alan Cleary, managing director of Precise Mortgages,says in this week’s round table cover feature on page 22, the market is chasing shadows. He contends that in meetings with the FSA in the run-up to Precise getting regulated in October 2010 it was clear it had no problem with either sub-prime or near-prime.

A good job too, as Precise’s research into the scope for near-prime which interviewed some 2,000 consumers, found one in 10 believe their credit record will prevent them getting a mortgage.

The reality is that products aimed at borrowers with impaired credit is key to getting the UK housing market back on track.