Non-conforming retention ‘would aid borrowers’

Stephen Brown, senior technical director at Moneyquest, believed adverse lenders needed to adopt retention strategies for clients who required another non-conforming deal to prevent them from slipping into further problems.

He said: “Adverse remortgage clients are being faced with a double whammy of tightened criteria and not being able to borrow as much as before. This is really restricting the products available to them and lenders should be thinking about a retention strategy. If lenders were to do this, the client may not be on as good a rate as before but they’ll at least have finance and won’t be stuck on the standard variable rate.”

Brown warned that the consequences to adverse clients could be huge, as an inability to get finance would push up repossession rates.

Alan Cleary, managing director at edeus, admitted that the current economic conditions meant that lenders were unwilling to take on non-conforming clients.

“All lenders have started to move away from high-risk clients, so not just adverse but high loan-to-value products for first-time buyers. Therefore, those that are not able to remortgage are faced with a brick wall and these are often the people who need to refinance to consolidate debts. If they can’t do this, then repossession is likely.

“Lenders don’t want to repossess but at the minute, only balance sheet lenders can hold the asset and take on the risk. But no one wants to be seen as the lender of last resort so no one is clamouring to help risky clients.”

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