Adverse credit mortgages are 'big business' says CML

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Adverse credit mortgages are 'big business' says CML

Thu 16th Nov 2006

Of those people securing a mortgage in 2005, five per cent had suffered credit problems in the past, highlighting a worrying trend of so-called adverse credit lending, suggests the Council of Mortgage Lenders (CML).

However, of this percentage, less than a quarter were in the 'high adverse' category, reflecting a tendency for individuals or families to experience credit problems in the short term but only a very small percentage were having serious financial problems.

According to the CML's research, the majority of adverse credit mortgages are being granted through intermediaries with four fifths securing a mortgage via this route as opposed to less than six in ten non-adverse mortgages that intermediaries fix.

"We believe that the adverse credit mortgage market, although higher risk, plays a valuable part in helping many individuals who encounter short-term financial difficulties to rehabilitate their finances and migrate back to prime products," explained Bob Pannell, the CML's head of research.

Adverse credit mortgages therefore account for the second largest specialist mortgage sector behind buy-to-let.

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