The non-standard market in the UK may be shrinking but there is potential for lenders to increase penetration according to market analyst Datamonitor. Currently, the market stands at 7.8m people, down from 7.9m in 2001 and 8.2m in 1998.
The report says the non-standard mortgage market was worth £15bn in 2002 having leapt from £7.4m in 1998. However, penetration of mortgages within the non-standard population remains lower than within the population as a whole. Datamonitor estimates that at 2002 year-end, 19.8% of non-standard households owned their property with a mortgage, relative to 43.3% of the population as a whole.
Datamonitor defines a non-standard individual as ‘someone who is systematically refused credit from mainstream lenders, whatever the size or nature of their application’. This definition includes people commonly classified as ‘sub-prime’, ‘non-status’, ‘non-conforming’, and ‘credit impaired’.
Datamonitor said the market benefited from the entry of mainstream financial institutions, increasing comparability between products offered by non-standard and mainstream lenders, greater acceptance of credit repair, positive press coverage, and terminology that avoids the negativity of the past.
‘Companies such as GE Capital, Lehman Brothers, Citigroup and Halifax would not have entered the non-standard market if they perceived it would threaten their overall brand,’ said Alex Boorman, author of the report. ‘The presence of these companies in the non-standard market gives it greater credibility and respectability,’ added Boorman.
