Reports of sub-prime’s death have been greatly exaggerated, with loans now available to borrowers refused by the high street.
Lenders are accepting some County Court Judgements or recently missed loan payments, though none of the deals exceed 80% LTV. It is hardly irresponsible lending and is welcome news.
These lenders deserve credit. They have had to overcome investor concern and be prepared for the polarised coverage from the media and regulatory and trade bodies.
Terms such as complex prime and non-standard have been resurrected to put clear blue water between previous lending misdemeanours and present activity.
Many years ago such cases would have been agreed on their individual merits. But automated credit scoring, recessions and the credit boom have done much to remove the grey hair from underwriting departments.
Now, arguable cases are automatically deemed as potential fraud, yet lenders know they are missing out.
These loans need their own class to be processed by automated credit scoring.
In reality such loans are for borrowers who previously would have been considered prime by high street lenders.
So should we be worried? No. The market continues to be largely dysfunctional with many borrowers facing exclusion if things do not improve.
This is a small but welcome step in the right direction.