Bad credit mortgages soar

More mainstream lenders are taking on customers with bad credit [photo: Pixmedia]

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Friday, 08, Jul 2005 04:06

Fewer and fewer people are being denied a mortgage because of bad credit, or their "non-traditional" status.

That is according to a new report by independent market analyst Datamonitor which found that increasing numbers of mainstream lenders are also getting in on the act.

But rather than being driven by public spirit, major high-street lenders are increasingly moving into the non-traditional sectors as competition in the mainstream market forces them to seek opportunities and profit margins elsewhere.

But regardless of the motives, Datamonitor points out that the outcome is a more competitive and better value market for people with bad credit or a less than orthodox financial background.

"The increased saturation of mainstream markets, whether credit cards or mortgages, has led to a number of mainstream lenders operating in the non-standard segment. Consequently, the non-standard sector is set to become very competitive in the near future," said Karina Purang, financial services analyst at Datamonitor.

And along with the increase in the products on offer, the attitude of the media and lenders to this market has improved, as major lenders help the market gain momentum along with a more respectable reputation.

"The non-standard population in the UK has more access than ever to credit as mainstream lenders grow their presence in this segment due to the attractive growth opportunities it offers," Ms Purang commented.

"Players have become very reactive by launching new products and reviewing their prices regularly within the non-standard mortgage market. The increased involvement of mainstream financial institutions into the non-standard sector is definitely good news to the non-standard customer," she added.

Datamonitor found that along with greater choice and more respect inside the market, increased employment, falling numbers of county court judgements, low levels of mortgage arrears, and fewer repossessions mean there are also fewer people being denied access to mortgages and credit cards than before.

The monitoring firm estimates that 300,000 fewer people in the UK were systematically refused credit by mainstream lenders in 2004 as they fell into the non-standard bracket. Since 1999 the overall number Britons declined credit by mainstream lenders has fallen by 600,000.