The last IMLA brokers survey showed just 4% of mortgages sourced by brokers in the final three months of 2008 were sub-prime.
Peter Williams, executive director of IMLA, says: “The number of people with what are now seen as imperfect credit histories is increasing rapidly.
“The government needs to help expand funding to help these people – this is a two-way street. The government must extend their support for the mortgage market to include the full range of lenders including non-deposit takers – it will free them up to offer specialist products to parts of the market which are most in need.”
Williams comments come after Gordon Brown’s suggestion to ban 100% LTV mortgages and the announcement that Northern Rock and Lloyds are to extend their lending to individuals this year as a result of government support.
Williams adds: “These moves underline the reality of a complex mortgage market, still very short of funds. There has already been a natural and dramatic reduction in the number of high LTV, sub-prime, self-cert and buy-to-let products on the market. As a result it’s very difficult for many existing borrowers to remortgage let alone for new borrowers enter the market.
“The government rightly wants to help homeowners facing repossession stay in their homes – but they have not yet addressed the root of the problem. There is simply not enough money in the mortgage market from the full range of lenders.”