The Intermediary – July 2025 - Flipbook - Page 37
RESIDENTIAL
Opinion
Future-proofing
near prime clients
T
he mortgage market
is in the midst of an
incredibly busy 12
months. According to
UK Finance, around
1.6 million fixed-rate
mortgage deals will mature in 2025, a
substantial figure.
This stems from a surge of 5-year
fixed-rate deals taken out in 2020,
when borrowers sought certainty.
But the borrowers returning to the
market today are not always in the
same position as when they locked in
those rates five years ago, with their
circumstances oen reflecting the
challenges of recent years.
For brokers, this presents both a
challenge and an opportunity. They
need to not just support clients whose
financial picture has changed now,
but also identify the lenders that can
ensure they enjoy a strong position in
the years ahead.
Working with the right lender
can ensure the client is much beer
prepared – and in fact beer off –
when the time comes to remortgage.
Changing profile
It’s no secret that the past five years
have been financially testing for
UK households. Energy bills have
been one of the biggest pinch points.
Council Tax has also become an
increasing burden, with most councils
opting to apply the maximum
permied rise this year, while
households have also had to adapt to
higher costs on everything from food
to broadband. It’s no surprise that
missed payments have become more
visible for brokers. The Money and
Pensions Service (MAPS) suggests that
one in three adults missed at least one
payment in 2023. In many cases, these
will have been short-term blips caused
by temporary financial strain, but
they may still be having an impact on
a borrower’s credit profile.
It’s an impact brokers are seeing
today, with those clients who went
through those payment problems a
year or so ago, but who are now hoping
to take out a mortgage.
They will no longer fit neatly into
the prime category. That modest credit
blemish on their record counts against
them, and while they are perfectly
capable of managing a mortgage today,
finding the right product is not always
straightforward.
Front of mind
Too oen, borrowers with minor
credit blips are pushed towards
specialist lenders, where they face
higher costs and limited flexibility.
But there are mainstream options that
can support those who experienced
temporary financial difficulties during
an extraordinary period.
Our own Near Prime proposition
has been adapted over the last year
based on broker feedback, and the
sort of cases they are seeing on a daily
basis. So there is a much larger cap for
unsatisfied defaults of £2,500, which
crucially only applies to the current
level of debt, not the debt at its outset.
If these would-be borrowers are
making progress in reducing the size
of their defaults, then that needs to be
recognised by lenders.
It also became clear that borrowers
with smaller deposits were locked out
of Near Prime lending, so we increased
our maximum loan-to-value (LTV)
to 90%. We want to open up property
ownership to more people, and that
means catering for those with a more
modest deposit as well as those with an
imperfect credit history.
The best brokers enjoy a long-term
relationship with their clients, and
that’s because their advice is guided
not just by the client’s needs in the
here and now, but the future too. It’s
all about delivering a balance of the
long- and short-term considerations.
When it comes to Near Prime, a
big factor therefore is how to help the
client return to Prime status. Being
classified as Near Prime today does not
DAVE CASTLING
is head of intermediaries
at Atom bank
mean a borrower should remain so
indefinitely. With proactive financial
management and the right lender
support, many can move back into the
Prime category over time, and benefit
from more competitive rates.
It’s something we have seen firsthand at Atom bank. If Near Prime
borrowers sufficiently improve their
financial circumstances over the
term of their fixed rate, then when
it’s time to remortgage, they will be
offered a Prime rate. Over the past 12
months, around 70% of Near Prime
borrowers coming to maturity have
been offered a Prime rate. That simply
isn’t an option with a specialist lender,
which cannot provide that positive
step forward should the borrower’s
status improve.
For brokers, this is where longterm client value comes into play. By
working with lenders that offer a path
back to Prime, they can help clients
secure a deal today, while also seing
them up for beer financial outcomes
in the future.
Short and long-term
The remortgage wave of 2025 presents
a huge opportunity for brokers, not
just in terms of transaction volume,
but in demonstrating the value of
expert advice.
The best brokers will be those who
take a holistic view of their clients’
needs: identifying where a Near
Prime solution is appropriate, but also
ensuring that clients are supported in
improving their profile and securing
the best possible outcomes when they
next refinance.
Keeping the future in mind will be
crucial not just when delivering the
advice, but also when selecting the
best lender for the case. ●
July 2025 | The Intermediary
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