Since the onset of the global credit crunch the term ’sub-prime’ has become something of a swearword in the financial industry, with lenders who were once doling out loans to those with bad track records shying away from anyone with even slightly tarnished credit.
The sub-prime mortgage sector has practically died a death over the past two years, and this has left even those with slightly damaged credit struggling to get mortgage finance. However, according to a recent report this could be changing with a couple of lenders now considering ‘almost prime’ and ‘complex prime’ consumers for mortgage loans.
Several years have passed since the financial meltdown began, which was parked across the pond and was partly blamed on subprime lending to those that could not make repayments. However, reports claim that General Electric Co.’s GE Money unit and Investec Plc’s Kensington division are now considering lending to those with slightly damaged credit who cannot get loans through mainstream lenders.
Compared to 2007 mortgage lending had fallen by 60 percent last year, and many lenders had stopped considering those with damaged credit for mortgage loans or any other type of finances. This has led to those with credit problems experiencing difficulties when it comes to getting a mortgage. However, the lenders that are easing up on the rules have said that it will not go back to the way it was in 2007, as they will ensure that customers have better credit histories and can meet repayments.
GE Money said: “‘Subprime’ sends messages out that people are lending money to individuals who can’t repay it. Our customers have clear track records though some may have had minor credit blips.”
Mortgage brokers believe that in the current climate there is a big gap in the market for those that have slightly damaged credit histories, as often these people are not a big risk but can still struggle to get mainstream finance.
Tags: credit, Subprime lending, finance, mortgage, Mortgage loan