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News: Credit crunch boost for BS lenders

Thu, 11 Oct 07

Balance sheet lenders are taking advantage of the credit crunch...

As the recent credit crunch forces lenders to reprice their mortgage rates and non conforming lending drops, traditional balance sheet lenders could look to take advantage and expand their business further into the non conforming arena, according to Spicerhaart Financial Services.

The proportion of non conforming mortgages arranged has fallen over the past month, with the Spicerhaart Financial Services monthly survey reporting a 41% drop in these products in September from 13.1% to just 7.7% of the market share. In the wake of the financial market turmoil, lending criteria were tightened, rates were increased and fewer products remained available to borrowers.

Heightened consumer awareness

Traditional balance sheet lenders that have not felt the full impact of the repriced risk of borrowing or increased cost of accessing funds could take advantage of the opportunity to expand into this market. Spicerhaart believes demand for non conforming products remains strong, despite heightened consumer awareness of the risks.

Steve Cox, Operations Director of Spicerhaart Financial Services comments: “The fall in non conforming lending, withdrawal of certain sub prime mortgage products and tightening of lending criteria was to be expected in the wake of the credit crunch.

“However, balance sheet lenders could rise to the challenge this opportunity provides and further evolve into the non conforming sector, ensuring the industry provides for all of market, maintaining the wide choice of products necessary to suit different borrower circumstances. Of course, an overwhelming consideration will be for advisers to ensure that such products are both affordable and suitable for their clients.”

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