Following the financial crisis in 2007-08 the sub-prime end of the market had all but died. Now lenders are slowly but surely returning to the market, seeing a gap and demographics to which they can offer more support.
On 30 June new challenger bank Masthaven became the most recent lender opening its doors to those who have experienced financial difficulties, from one or two missed mortgage payments through to CCJs, dependent of course on how recent and large these CCJs are for. Joining firms such as Pepper Homeloans (who recently announced it had “slashed” rates on some products), Kensington Mortgages, Bluestone and Vida Homeloans this will be a welcome addition to those who have been calling for the market to do more for those who don’t fit the mould.
However this return has not come without some alarm. Last year a record 912,389 borrowers obtained a CCJ, and industry insiders such as Peter Gettins at London & Country has warned “There is an obligation on brokers and lenders to check that the borrowing is sensible and appropriate” whilst the market explores what is and is not appropriate borrowing. Yet, even as the numbers of CCJs have increased, the average value of them is falling, down to £1,711 – a 16 per cent decrease on the year before. Perhaps suggesting an increasing willingness from telecoms and utility companies to take action much earlier than previously, skewing what information we may be able to take from the data.
Whether these moves are a sign of the market beginning to overstretch itself, or whether it’s a sign of credit risk functions not adapting to the needs of the market is unclear. What is clear however is that with demographic changes such as the rise of the self-employed and the end of the days of the nuclear family, this is a question that will come up time and time again as sub-prime takes in niche and niche becomes mainstream.
I can’t promise all these questions will be solved at the conference, in fact I’m damn sure they won’t. But I would highly recommend our credit risk stream where speakers certainly won’t always agree but, will comprise some the industry’s brightest discussing the impact of these very issues on their organisations. A chance to move forward with the industry at a point of pivotal change as it plots the future of risk.