You are here: Home - Better Business - Business Skills -

Subprime is returning and brokers need to know their role – Edwards

by: Dave Edwards, commercial director of Personal Touch
  • 14/08/2017
  • 0
Subprime is returning and brokers need to know their role – Edwards
Don’t say it too loudly, but subprime is back.

According to reports, Masthaven is to start catering for borrowers who don’t have a shiny credit history while lenders like Pepper offers products primarily for borrowers who have had financial issues in the past.

The term itself clearly causes concern, given that it was largely blamed for the economic crash which began ten years ago this year, but this market is now developing again.

Given recent history it is understandable if brokers are hesitant to start working again in this area.


So how can brokers protect themselves this time round?

  • Recognise the mistakes of the past. The mortgage broker market has always been particularly conscientious and most of the issues surround lax lending was not a result of anything the intermediary did. However, it is still important to look at how things operated back then and what changes need to be made.
  • Be aware of your new role following the Mortgage Market Review (MMR) and Mortgage Credit Directive. Yes, under MMR rules the responsibility for assessing affordability lies ultimately with the mortgage lender, but the requirements on brokers in terms of packaging the case and collecting the necessary information has increased significantly. Make sure you are conducting as thorough a fact find as possible.
  • Remember to stress test. Affordability is not just an issue for the present but for the future too. It’s essential that you are comfortable that the borrower will not fall into financial hardship if rates rise in two or three years. It’s important to protect your own reputation and always consider the risk against the reward.


Subprime in itself was never a bad thing. Indeed, it is right that the market should look to cater for borrowers of different circumstances if they can afford it.

It was how subprime was offered and the lackadaisical approach to it in some corners of the industry that caused the problems.

Let’s make sure we work together to prevent that happening again this time round.

There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.


Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.


Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.


Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
  • RT @robjupp: Great day yesterday for donations to @MortSleepOut. With Gift Aid, we are now close to £17,000. It would be great to get to £2…

Read previous post:
House price slump continues amid slowing market

Annual house price growth throughout England and Wales continues to slow according to figures from estate agent Your Move.