At the recent Mortgage Strategy Awards, which was a wonderfully organised and superb evening, there were awards for firms in many and varied areas of the mortgage industry.
This got me thinking – when is a sub-prime lender a sub-prime lender? All the sub-prime lenders on our panel now offer prime or near prime products which are giving high street lenders a run for their money.
I understand why lenders offer prime products and applaud this. Prime deals offer low risk lending as an offset to the comparatively high risk and high yield sector of sub-prime lending.
Meanwhile, offering sub-prime deals also allows packagers to cascade business up to the prime category if it is discovered that a client’s situation is not as serious as was first thought.
Kensington Mortgages now offers a range of prime products covering status, self-cert and buy-to-let. Rates start at 5.45% and require no credit scores. With no indemnity guarantee charged on any product, these deals are excellent value for money.
However, there is a stigma attached to sub-prime lending. Because Kensington is known as a sub-prime lender, it will take a while to shake off the preconceptions people have about it.
But intermediaries should regard all lenders that offer prime deals as a complement to what high street lenders have to offer. If their rates are as competitive and their service is as good or even better they should be considered, de-spite the fact that they offer sub-prime deals as well. and sub-prime products is rosy indeed. They have covered all aspects of mortgage lending and embraced packagers’ propositions. And with the mortgage industry being the competitive animal it is, this can only benefit the most important people of all – customers.
However, the big question is whether people will be able to see past the unfair stigma that is attached to sub-prime, lending and understand that sub-prime lenders that branch out into the prime arena are a genuine challenge to established high street names. I believe they will.