Business in the sub-prime sector is set to increase by £4bn over the next 12 months, according to Preferred Mortgages.
The specialist lender’s Sub-Prime Market Report found that 86% of IFAs and mortgage brokers expect the credit impaired sector to increase by £4bn over the next year, and 76% thought the next big growth area would be in light-adverse mortgages.
These predictions were based on the experience of the respondents, 57% of which had significantly increased their activity levels in the sub-prime market in the last 12 months, and 68% of which expecting to be more active over the coming year. The findings contrasted strongly with the results of the same survey carried out last year when only 19% of respondents had undertaken sub-prime business in the last year.
A further 71% expected more high-street lenders to enter the sub-prime market next year, although 61% were doubtful they would be able to compete if they continued to use credit scoring techniques.
Simon Biddle, marketing development manager at Preferred Mortgages, said: ‘Our report identifies the growing trend towards sub-prime mortgage products, and shows that while an increasing number of mainstream lenders continue to enter the market, intermediaries are still unconvinced that they will be able to make an impact without becoming more flexible.’