| Non-standard borrowing sector shows phenomenal growth: Datamonitor |
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Market analyst Datamonitor has released a new report, which shows that 'bad' borrowers who had trouble finding lenders are no longer seen as a liability. The report added that mortgage lending to such 'risky' borrowers has grown at twice the rate as comparable to the standard markets.
Datamonitor said that since this market was showing a significant rise, reputed financial institutions as well as the mainstream lenders were now beginning to relax their stringent rules as far lending to such customers was concerned.
As a result of this relaxation, "fewer and fewer people who had bad credit histories were being denied mortgages." Datamonitor also speculated that the cutthroat competition in the mainstream sector was forcing High-street lenders to seek newer markets, what the firm called 'non-traditional sectors.'
"Consequently, the non-standard sector is set to become very competitive in the near future," Karina Purang, Datamonitor's financial services analyst said. She added that the market was only poised to show more growth since "increased involvement of mainstream financial institutions into the non-standard sector" was a positive sign.
What this means is that consumers who were previously faced with a Hobson's choice were now able to pick and choose lenders from whom they could borrow. The firm said that 9.1 million Britons had been denied credit in 2004; this number had now fallen by 300,000 as compared to the previous year since low levels of mortgage arrears meant that fewer people were being turned back.
The firm also found that almost £41.2 billion was advanced to the non-traditional borrowers out of which £35.1 billion was related to mortgages. This number is almost 9.1 percent as compared to the 4.5 percent in the traditional sector.
Posted
on : Tue, 12 Jul 2005 08:35 GMT | Mortgages News
By : Rob Davis
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