History Of Credit

A search for a concise definition from Wikipedia, the online encyclopedia, tells us that, "subprime lending, also called "B-Paper," "near-prime," or "second chance" lending, is a general term that refers to the practice of making loans to borrowers who do not qualify for market interest rates because of problems with their credit history." Economic down turns and personal hard times will create an atmosphere where subprime "predatory" lending practices can flourish. In recent months, the national news has been full of stories about the subprime lending market and the potentially disastrous debts befalling homebuyers and mortgage holders. Buying a home can be bewildering for anyone, and people with little financial savvy can be sold sophisticated financial instruments with little understanding of the details, their long-term responsibilities, or the potential for negative consequences.

Bad credit history 'doesn't have to mean bad mortgage deal'

Having a bad credit rating does not necessarily mean customers can only obtain a poor mortgage deal, a leading lender has claimed.According to L&C, 71 per cent of people who have come to the company with a bad credit rating have been able to secure a mainstream mortgage deal with a competitive interest rate.Many people believe that a recent history of bad debt or County Court Judgements (CCJs) would prevent them getting competitive mortgage deals. However, L&C revealed that the situation is less clear than that, and that some lenders are more lenient that others."All too often, people assume that because they've had some credit problems in the past, they will have to pay a much higher interest rate and in some cases, high broker fees," explained James Cotton, a mortgage specialist at L&C."In fact, our research shows that by getting whole of market advice from L&C, borrowers can seek out the best deal for their circumstances and can often secure a better rate than they thought possible."A recent study from the Mortgage Trust found that record numbers of people were opting for fixed-rate mortgages.As interest rates have risen, the percentage of people choosing these sorts of mortgage has increased from 48 per cent to over 60 per cent.

Mortgage lending more tailored to borrowers' needs, CML claims

Lenders are now taking steps to tailor Mortgages to better incorporate the risk factors associated with individual customers' circumstances, the Council of Mortgage Lenders (CML) has revealed.The CML said mortgage lenders are increasingly looking at affordability measures and taking a "much more individualistic approach" to the needs of their customers.It went on to explain that the growth of the sub-prime mortgage market in particular had proved difficult to monitor due to the varying definitions of what a sub-prime mortgage actually is.Generally sub-prime Mortgages target borrowers who do not qualify for prime Mortgages because of adverse credit history and as such are offered at a higher rate than standard mortgages due to this increased risk. "Part of the difficulty with producing hard and fast data on this is the lack of a clear definition of what constitutes a sub-prime mortgage," Bernard Clarke, spokesperson for CML."People have a variety of different circumstances, many of which mean that they don't qualify for a prime mortgage, but there may be other products that can help them," he added.