Expert explains how mainstream lenders can assist near prime borrowers
Navigating the intricate landscape of near prime borrowers requires a fresh perspective, challenging the conventional belief that specialists are the sole remedy.
As such, Mortgage Introducer has reached out to an expert to delve into the nuanced considerations, from holistic client assessments to the pivotal role of technology, debunking myths and advocating for a more inclusive and responsive approach in meeting the diverse needs of near prime borrowers.
How can mainstream lenders support near prime borrowers?
Richard Harrison (pictured), head of mortgages from Atom Bank, said while specialist lenders might be the go-to for a number of clients, mainstream lenders offer a myriad of advantages, from competitive pricing to cutting-edge technology.
“I cannot stress enough the importance of a holistic client assessment; relying solely on credit scores is a stumbling block for borrowers with minor credit hiccups,” he said.
These blips, familiar to brokers, Harrison said, can significantly impact a client's borrowing options with many lenders.
However, many mainstream lenders, he added, offer a different route, opting for a comprehensive evaluation that goes beyond a simple credit score.
“The truth is, credit scores, while valuable, only offer a partial glimpse into a client's ability to sustain mortgage repayments over the long term,” Harrison said.
A pivotal factor here, he added, is the rigid reliance on credit scores inevitably putting those with sporadic marks on their credit history at a disadvantage.
Many mainstream lenders, focus on set policy rules rather than fixating on credit scores, allowing for more informed decisions, Harrison explained.
“This approach ensures that borrowers with minor historical issues can still obtain the mortgage they desire or secure a better rate than their current one,” he said.
How important is time sensitivity for near prime borrowers?
Time sensitivity is another crucial dimension, and Harrison said collaborating with technology-driven lenders translates to a faster experience for near prime borrowers.
“This opens up the option of utilising Automated Valuation Models (AVMs) in such cases, a facility not always available when opting for the specialist route,” he said.
Time is of the essence for all borrowers, but Harrison said for near prime borrowers facing urgent deadlines and the risk of moving onto a costly Standard Variable Rate (SVR), rapid responses and certainty about future repayments become particularly valuable.
The ability to expedite decisions not only benefits borrowers in meeting deadlines, he said, but also alleviates stress associated with the mortgage approval process, especially for those with credit concerns.
“The resilience of the mortgage market lies in its ability to adapt to changing times and find innovative ways to meet the needs of aspiring borrowers,” he said.
Near prime borrowers, despite the label, Harrison said, share the same fundamental mortgage needs as any other borrower.
In the face of the ongoing cost-of-living crisis, which is likely to persist, Harrison suggested, more prospective clients will inevitably have occasional blips in their credit history.
“Mainstream lenders are poised to step in and support these borrowers; however, the key is to avoid penalising them with limited, more expensive product choices and slower lending decisions due to their unique circumstances,” he said.
As such, Harrison reasoned, adaptability is paramount, - he believes lenders need to adopt a flexible approach to cater to the diverse needs of near prime clients.
“Supporting them in accessing products and processes similar to those offered to prime borrowers is essential,” he added.
As the economic landscape continues to evolve, Harrison said the mortgage market must evolve with it, ensuring that borrowers, regardless of their credit history, have access to a range of options without compromising on speed or affordability.
“In conclusion, the near prime borrower should not be confined to the narrow path of specialist lenders; mainstream lenders, embracing holistic assessments and leveraging technology for efficiency, can provide a more inclusive and responsive solution,” Harrison said.
As the financial landscape transforms, he added, lenders must recognise the changing dynamics and adapt to meet the evolving needs of near prime borrowers, offering them the support and flexibility they require in securing their mortgages.
How have you witnessed mainstream lenders supporting near prime borrowers? Let us know in the comment section below.
