TFC Homeloans, the specialist distributor, believes that the lighter end of the sub-prime mortgage market could be returning, though those choosing to operate in it will continue to reject the traditional terminology.
It says by rebranding the sector lenders and advisers will avoid associating themselves with the negative connotations of adverse credit.
The distributor points at recent debate around the resurfacing and redefining of the term ’complex prime’ as proof there will be widespread reluctance to use terminology such as ’sub-prime’ or ’adverse credit’, as they have become ’dirty words’ in the public perception.
Andy Brown, managing partner of TFC Homeloans, says: “This sector of our industry needs a rebrand. Lenders used to proudly define themselves as ’sub prime’, ’adverse credit’, ’non conforming’ or the umbrella term ’specialist’, but they now distance themselves from this business, but also from the language.
“We now see lenders not credit scoring, others helping applicants with CCJs and defaults, but all insisting that they’re not operating in sub prime mortgage lending. That’s a fair claim, but it’s a distraction, they’re now helping clients who were out in the cold previously, which is good news all round.
“My point is that lenders wouldn’t have seen such need to deny or admit the terminology in the past. We now use the new term ’complex prime’, which wasn’t commonly used before, which is quite distinct and which may or may not survive. We’re likely to see other terms appear, to segment and define the market when lending appetite returns.”
Derek McGuire, co-founder of Marketing Innovation Forum, says: “Just as companies rebadge and rename themselves to shake off negative associations and appear fresh, the financial services industry is distancing itself from the hellish public perception of ’sub prime mortgages’.
“Demand for a sub prime mortgage market has grown due to the recession, so lending should return at the lighter end, albeit rebranded. While lenders may recognise the potential and value the first mover advantage of servicing this large, lucrative market, they will have understandable worries about the PR nightmare of doing so.
“Funding is of course key, but reputation management is also important, and a rebrand addresses one barrier to reopening this market.”