Atom Bank has increased the maximum LTV available on its Near Prime range to 95%.
Atom says the expansion of its range is in direct response to broker feedback and is designed to support borrowers with light adverse credit history or thin files.
The 95% products are available to those who have had no defaults in the last 12 months, and no more than one in the last 36 months. The unsatisfied default value must be less than £500.
Other criteria include no CCJs in the last 36 months, and no more than one in the last 37 to 72 months, with a value of no more than £500 for unsatisfied CCJs. There must also be no mortgage arrears in the last 12 months, with no more than two months of mortgage arrears in the last 13-24 months.
Rates for the new 95% LTV near prime products start at 6.59% for a two-year fixed rate, with an arrangement fee of £1,995.
Alongside the launch, Atom has also reduced rates on its existing near prime range up to 90% LTV by 0.10%, with rates now starting from 5.29%.
Recent research from Atom found more than a third (36%) of brokers felt that deposit size was the biggest barrier to submitting an application for their near prime clients.
The challenge of ‘thin’ credit files was also highlighted as a particular challenge for first-time buyers by more than a quarter (27%) of brokers. Previous studies from Experian have suggested there are as many as five million people in the UK who are essentially ‘invisible’ to the credit system as a result of a lack of financial data, potentially excluding them from prime finance.
Richard Harrison, head of mortgages at Atom Bank, commented: “Brokers have been calling for more options for near prime borrowers with modest deposits, so I’m certain this launch will be well received. We have consistently listened and acted to refine our near prime proposition, ensuring it supports the types of cases brokers are seeing every day. Our Near Prime Index suggested that brokers are handling an increasing number of near prime cases and expect this to grow further, making it essential for lenders to deliver practical solutions.
“These products have been designed with a particular subset in mind, the borrowers who have only light adverse history - or little credit history at all. Combined with a small deposit, they can find it incredibly difficult to access a mortgage with many mainstream lenders. These new products aim to remove those barriers, ensuring borrowers can get onto, or move up, the housing ladder even if they have an imperfect credit history.”
