A dismal 19% of consumers aware of sub-prime market

Despite predictions that the sub-prime sector is set to grow significantly over the next few years, only 19% of consumers have heard of the sub-prime market, research from Beacon Homeloans reveals.

While many consumers were ignorant as to what this sector actually covered, they were clearer as to who could benefit from it.

The research found that 42% of respondents identified people with credit problems as the primary users, whilst 21% felt the market targeted the self-employed.

However, a worrying 20% considered it to be a market for people who need to borrow above their income multiples, 10% stated that they thought it was for divorcees and 8% for the unemployed.

The survey went on to reveal that in a society where 30% of people admitted to credit difficulties, very few people had any real knowledge of the specialist mortgage products available to help them purchase a home.

Just 42% of respondents correctly identified a sub-prime mortgage as one that could be taken out by people who had credit difficulties in the past.

The remaining respondents believe this type of financing combined different interest rates (40%), was any mortgage you got from an institution other than a high street bank (11%) or allowed you to borrow more than five times your salary (8%).

Possibly due to the extensive interest this type of product received after the BBC Watchdog programme in 2004, more consumers correctly identified what a self-cert mortgage is (69%).

However, there was also a certain level of ignorance with 13% believing this is when you employer certifies your income, 10% a type of financing which allows irregular payments and 9% saying it takes into account previous payment history.

However, the report did reveal some good news with 44% of consumers saying that if they had credit problems and needed a mortgage they would firstly speak to an independent financial adviser.

The remaining respondents would visit their bank first (22%), their building society (21%) or a specialist lender (12%).