Demand For Non-Conforming Mortgages Growing
Demand for non-standard mortgages, a 125 billion pound market, will grow as people's financial circumstances are complicated by the increasing divorce rate, popularity of self-employment, and debt problems, according to a survey of 2000 adults that was published by consumer research group Mintel.
Mintel said 9 percent of British mortgage holders were classed as sub-prime, while a further 24 percent were "non-standard" and relatively high risk because they had irregular incomes.
"In today's more conservative lending climate, the unconventional financial situation of these homeowners means that they will now face higher repayments and increased lenders' fees when remortgaging or moving house," Mintel said.
Two fifths of the adult population, around 18 million people, now qualify as non-standard consumers and that figure is expected to increase to 20 million by 2012, according to the Mintel report.
"But ironically as lenders become increasingly cautious, these non-standard mortgages will become harder to come by, leaving more adults without the finances needed to buy property," Clark said.
Historically, this group has been one of the highest risks.
Ray Boulger, senior technical manager at John Charcol, said: "Some existing non-conforming borrowers will be unable to remortgage, or afford the rate their mortgage reverts to when the initial deal finishes, and they will have to sell or their properties will be repossessed.
"I predict the net result is that house prices will fall a little in the first half of the year - by up to 5% - but by June the fall in Bank Rate and an easing of the liquidity squeeze will stabilise the market, although it will still be very difficult for non-conforming borrowers."
Published on January 10, 2008
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