New Types of Mortgages for UK Borrowers

The world of mortgage lending has undergone massive changes over the last few years, but as property prices steadily increase and the new confidence in the market place, we are now seeing new shifts and products within realm of mortgage lending.

Complex prime mortgages are now being offered by many of the newer and smaller lenders in the market place, according to property management figures, which not only gives them a point of difference to the major banks but also gives prospective home-owners another available avenue to secure finance for their London property. Essentially a complex prime mortgage is a loan which although is still based on income is more flexible that the high street lenders. For example, if a couple were asset-rich but had either no credit history or had experienced credit problems, a complex prime lender would potentially still make the funds available, although they would pay a premium on their rate.

Kensington, one of the largest sub prime lenders has recently announced they are now prepared to look at mortgages for applicants who have endured credit problems. This is a welcome statement as it means that the market place is finally reacting to the needs of the consumer.

These shifts in the market place and the advancement of the new products is due to the inflexibility of the major bank’s underwriting criteria. They remain as strict as ever when assessing a potential borrower. Although there has been a slight reduction in rates in recent weeks which will increase competition and aid the slow steady improvement over the last year.

Currently the best rates in the market place are offered by Barclays/Woolwich but there are also a number of new lenders entering the market place; Virgin Money, Metro Bank and Aldermores. Although they are not expected to massively increase the amount of lending within the UK market, their presence alone will alert the major players and increase the choice for prospective borrowers.

In conclusion, there has not been any moderation of lending criteria in the UK’s major banks which has led to new “complex prime” products entering the market place. Furthermore, lenders like Kensington are now recognising that there are many potential customers out there that simply need a different set of criteria for their desired mortgage. The new lenders on the block and the easing of rates mean that the mortgage market is on the move and again becoming a competitive market place.