What is the difference between near-prime and sub-prime? Are they slightly different degrees of the same thing or is sub-prime being rebranded? Is it just a case of change the name and do the same?
Just as some of us were shouted down when we expressed concern about self-cert for employed borrowers, the desire to ‘find a niche’ may once more justify some questionable lending practices.
Near-prime is beguiling and harmless. It sweeps up all the deals the high street will not do, helping a swathe of underserved borrowers.
However, let us not kid ourselves this is a big market because it is not.
In buy-to-let, I broadly see two types of near-prime borrowers: those who had a bad recession but worked with lenders to extricate themselves from their problems; and those who were more cavalier with lenders’ money, preferring to sustain a lifestyle rather than pay their mortgage debts. Why would you give the latter another chance?
We should never kid ourselves about the risk. But some lenders may be doing so, fooling themselves that they are lending to the deserving rather than the feckless.