The Intermediary – October 2025 - Flipbook - Page 20
RESIDENTIAL
Opinion
Near prime products
may be better
than you think
N
ear prime is an area of
the mortgage market
which has become
increasingly important
for brokers in recent
years. Cost-of-living
pressures have meant brokers are
seeing more clients with some sort of
payment blip in their recent history.
The market has responded, with
lenders developing far more flexible
and realistic products. Indeed, we
have seen record levels of Near Prime
activity at Atom bank since the turn of
the year, demonstrating how sought
aer such lending is.
However, we do occasionally hear
of misconceptions around how near
prime really works, which may be
holding brokers back from making the
most of this product area.
What credit score?
Perhaps the clearest evidence of a
person falling into the near prime
category, rather than prime, is their
credit score. Aer all, those missed
and late payments, or any County
Court Judgements (CCJs), will have a
substantial impact on the score.
However, credit scores do not
necessarily need to play a part in
actually assessing those applying
for near prime mortgage products.
Such scores do not always give the
fullest picture of what a client can
really afford each month. Some
lenders, including Atom, carry out
more bespoke assessments, to get a
more comprehensive insight into the
borrower’s prospects. As a result, it’s
important for brokers not to get too
hung up on the client’s credit score,
since in practice it may not have the
biggest bearing on the final decision if
they work with the right lender.
One of the biggest issues around
near prime is how a temporary issue
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The Intermediary | October 2025
can have a long-lasting and outsized
impact on a borrower’s ability to access
a mortgage.
This is particularly true when
it comes to the level of unsatisfied
defaults an applicant has. While
lenders in this space will oen have
a cap in place for these defaults,
there can be some confusion over
whether this refers to the size of the
debt at the outset of the issue, or its
current standing.
At Atom bank, for example, our
£2,500 cap applies to the current
outstanding balance, rather than
the initial debt. We believe it means
we can support a wider range of
near prime candidates, while also
recognising the progress that has been
made in reducing the debt.
Different process
A common misconception with near
prime is the expectation that the
process will have to be different from
their prime customers. The valuation,
for example, will need to be carried
out manually, while the document
assessments will be more protracted.
This isn’t always the case. There
are lenders that will make automated
valuation models (AVM) available
for near prime cases, while at Atom I
know that our document assessment
service level agreements (SLAs) are the
same for all borrowers, irrespective
of their credit status. The fact that a
client has a less than perfect credit
history does not – and honestly,
should not – preclude them from
enjoying the same quality, fast service
as the most prime of applicants.
The right direction
Being near prime is not a life sentence.
Brokers will want to help their clients
regain prime status, and with it access
to more keenly priced products.
DAVID CASTLING
is head of intermediaries
at Atom bank
For the broker, there are many
questions to ask about how the lender
will help that happen.
How proactive is the lender in
monitoring the borrower’s account, so
that any recurrence of payment issues
is picked up as early as possible?
How will the lender react if there
are issues – will they hit the borrower
with yet more late payment and
arrears fees, making the journey out
of near prime even more difficult?
Then there is the question of
refinance. What are the borrower’s
options if things have gone well and
their status has improved over the
term of the fixed rate?
I know that offering a clear path
back to prime has been invaluable for
our near prime borrowers, who are
automatically offered a Prime rate at
maturity if they qualify.
Those offers were made to around
three-quarters of our near prime
borrowers last year, a great example
of how the lender’s approach can offer
tangible benefits to those looking to
recover from a temporary issue.
Crucial clarity
Delivering for near prime borrowers
and their current needs is enormously
important, and the level of activity
shows how crucial such products
are right now. What’s more, that’s
unlikely to change in the foreseeable
future, which is why it’s so crucial
for lenders to spread the word about
precisely how the products and criteria
work in action. It’s only by clearing
up misunderstandings that we can
ensure the sector reaches its potential
and supports the maximum number
of borrowers. ●
