LIVE FROM JEREZ: Mainstream lenders scared shitless

Mainstream lenders are still scared shitless by the sub-prime market.

That was the message this afternoon from Michael Bolton, managing director of HBOS Specialist Lending, speaking at the Mortgage Summit in Jerez, Spain.

Bolton launched a stinging attack against the likes of Barclays and Bristol & West, criticising them for being no more than a fa栤e for other lenders.

He told Jerez delegates: 2004 saw massive change in the sub-prime market and it seemed each month another lender would join the sub-prime ranks albeit with the mainstream lenders still bottling it.

But he says Boutique lenders, such as Beacon Home Loans, recently launched by the sub-prime dream team of sales maestro Brian Pitt and the enigmatic Mark Abbott, would continue to thrive for the near future, helping to serve a market that comprises some 9.1 million adults that are estimated to have been refused credit in the last year.

Bolton went on to say that lenders such as Platform, GMAC-RFC and HBOS subsidiary BM Solutions would continue to lead the way in the sub-prime sector but he conceded the likes of Beacon Home Loans would do well over the coming years.

He adds: Arrears and repossessions towards the end of 2004 showed a slight dip compared to 2003.

“But this trend reversed in early 2005 and we are slowly seeing the business creep back.

However, he warned that prime lenders were fuelling tomorrows sub-prime market by relaxing their affordability models, allowing borrowers to overstretch themselves.

Bolton also told Jerez delegates that remortgaging would continue to play a key part in the sub-prime market, with 29% of sub-prime applicants citing debt consolidation as the reason for the loan.

He also questioned whether branded lending had a future in the sub-prime market or whether it was a short-term scam to get around fee disclosure.