Guide to the return of subprime
- Learn what is meant by subprime or credit impaired and how the market has developed since 2007.
- Understand why providers have re-entered the subprime market and what the signs of another crisis are.
- Comprehend how to clients with complex mortgage needs onto the property ladder.
Guide to the return of subprime
- Learn what is meant by subprime or credit impaired and how the market has developed since 2007.
- Understand why providers have re-entered the subprime market and what the signs of another crisis are.
- Comprehend how to clients with complex mortgage needs onto the property ladder.
Introduction
By Ellie Duncan
Say the word 'subprime' to anyone in the mortgage industry and it is likely to bring to mind the financial crisis of 2007.
In the years prior, mortgages were being handed out to all types of borrowers, including those who simply could not afford the repayments. The issue was particularly acute in the US but the UK market was also taking lending risks.
Put very simply, it was this type of lending which eventually led to the crash.
Since then, both the mortgage market and the regulator have taken steps to ensure nothing on that scale ever takes place again.
But there are still borrowers with imperfect credit histories who want to take out mortgages and can do so, as specialist lenders and building societies have come to market with products for those who are usually described now as credit impaired, rather than subprime.
Charlotte Nelson, press officer at Moneyfacts, observes there are products out there but the affordability rules are tougher.
She insists: "The market has learned from the past, which means stricter rules are now firmly in place, with many of the lenders offering these deals looking more in-depth into a borrower’s history."
This guide will look at what subprime, as it was once known, is and how the market is different from the one in 2007. It will also explore whether there is still a need for subprime or credit impaired mortgage ranges and what type of borrowers are likely to benefit.
It will also question whether another subprime crisis could occur and the signs to look out for, and how advisers and brokers can help those clients onto the mortgage ladder.
The guide is worth an indicative 60 minutes of structured CPD.
Contributors to this guide: Ray Boulger, senior mortgage technical director at John Charcol; Charlotte Nelson, press officer at Moneyfacts; David Torpey, chief operating officer at Bluestone Mortgages; Jeremy Duncombe, director of Legal & General Mortgage Club (at time of writing); Rob Barnard, sales director at Pepper Homeloans; June Deasy, head of mortgages policy at UK Finance; Moneyfacts.co.uk; UK Finance; Department for Communities and Local Government; helptobuy.gov.uk; Homegrown; Ipswich Building Society.
Ellie Duncan is deputy content plus editor at FTAdviser
