Surge in non-conforming mortgages

The last ten years has seen the non-conforming mortgage market grow six times faster than the mainstream market.

Figures from the Council of Mortgage lenders show that while a decade ago just £1 billion worth of non-conforming mortgages were sold, now this has risen to £25 billion.

And in the intervening years the situation has drastically improved for people taking on home loans with bad credit.

David Tweedy, managing director of Platform, said that borrowers' options have increased in the last decade, with fixed, discount, and tracker varieties of non-conforming mortgages all now available.

He added that early redemption charges are now less common and many lenders are looking at higher maximum loan-to-value ratios than they were ten years ago, in a presentation to a CML seminar.

Competition in the marketplace has also helped consumers - with at least 30 lenders in the market now, more than double the number in 2000.

This rise in mortgage lending, and increased competition, has come as demand for non-conforming mortgages has surged.

In the last ten years personal debt has soared, with an accompanying increase in the number of county court judgements and instances of late payment on all kinds of loans.

Additionally, bankruptcy and individual voluntary agreements are at record levels, and self-employment has risen.

These factors mean increasing numbers of people are pushed away from the traditional mortgage market and into the non-conforming sector.

And the larger the market, the better the news for consumers.

An expanding market offers room for new entrants – increasing competition among lenders and lowering costs, Mr Tweedy pointed out.

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