Accord transfers to near-prime
It is the first time the lender has brought features of its prime range over, and it believes the product – a five-year near-prime fix at 5.85 per cent – marks the first time it has been done in the non-conforming market.
Linda Will, managing director of Accord, commented: “Often the same factors affect both the prime and near-prime markets but this is genuinely a first in the non-conforming market. A lot of people are coming into the market but the existing companies have to compete against each other too, and we believe this is an example of something good from our prime side being transferred over onto our near-prime side.”
The five-year fix allows up to 95 per cent loan-to-value but is only available to people earning over £30,000 a year. However, to accompany this, Accord has raised its income multiples on the product to 4.25 times.
Accord believes the product also highlights the growing ambiguity between prime and near-prime products, especially for those earning that little bit more.
Will said: “Below £30,000, a person’s disposable income is not enough to warrant going that high with the income multiples, as they have other things to worry about. However, when it comes to prime and near-prime, both are very similar and the slight grey areas are not as important when you earn a bit more.”
Michael Brill, director of Baronworth Investment Services, warned that brokers must use higher income multiples responsibly.
“They can be very good for the client and help get them the mortgage they want. However, lenders and intermediaries have to be responsible for the amount they are borrowing, as even people who earn over £30,000 have other outgoings and can overspend.”