CAM approach could encourage debts

Mortgage brokers have expressed concern that Britannic Money&#39s new FRESH sub-prime CAM mortgage could encourage naïve borrowers to get further into debt.

Trevor Youens, director of Flower Independent Financial Advisers, says: “At least Britannic is not taking them into a CAM straightaway but I am still concerned that it allows people to get further into debt very easily.”

Bill Petrie, head of mortgage services at Towry Law, says: “Sub-prime borrowers need a fixed rate, without the volatility of interest rate which comes from being linked to LIBOR.”

Mark Osland, director of Fidelius, says: “I welcome anything that offers an overpayment facility, but question the wisdom of giving an underpayment facility to people who have had problems in the past.”

Other brokers are more positive. Rod Murdison of Murdison & Browning says: “Most people who have been in a bad financial situation in the past are subsequently better than average at handling money because they are so delighted at being given a second chance.”

Mike Fitzgerald, sales director at Brentchase Financial Services, agrees. And he adds: “A lot of sub-prime borrowers are in business and used to running several bank accounts at a time. They may have become sub-prime simply because a supplier went bust.”

Other CAM lenders do not intend to offer sub-prime products at present. Scott Mowbray, marketing manager at VirginOne, says: “Britannic Money has made an innovative move but we will not be following the same route because we feel there is enough margin to be made in the prime market.”

But Rachel Ramsden, Britannic head of marketing, says: “We are giving people who have traditionally not been able to get this kind of product the chance to have one. There is no way for them to get into debt with our product.”