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Adverse Credit Mortgages Are Second Largest Specialist Group In 2005

A recent report has been released showing that in 2005 adverse credit mortgages made up the second largest specialist lending group after buy to let mortgages. Over five percent of total mortgage borrowing was by adverse credit consumers in 2005, according to data released by the Council of Mortgage Lenders in the UK.

Adverse Credit MortgagesThe Council of Mortgage Lenders went on to state that these adverse credit mortgages were split between low adverse consumers and high adverse consumers, with those that had low adverse credit taking on nearly half of the adverse credit loans, and those with high adverse credit taking on less than a quarter. The Council of Mortgage Lenders also stated that intermediaries had sold around eighty percent of adverse mortgages in this period, compared to the substantially lower sixty percent of non-adverse credit mortgages.

The large majority of adverse credit loans, according to the Council of Mortgage Lenders went to those looking for a remortgage rather than a standard mortgage, with over two thirds of adverse credit mortgages falling under the remortgage category. This is thought to be because those with adverse credit tend to have a higher level of debt than those with non-adverse credit, and a remortgage provides them with an effective and affordable solution to consolidating their debt and enjoying lower monthly repayments.

The Head of Research at the Council of Mortgage Lenders, Bob Pannell, stated: "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." He added: "There are many flavors of adverse credit mortgages to deal with the broad range of circumstances that people face. It is a real testament to the dynamic and innovative nature of our market that UK lenders are able to offer an attractive range of mortgages to suit these different circumstances."

Alisdair Milton
17th November 2006


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