Atom Bank has announced rate reductions across its near prime residential mortgage range.

The lender has cut rates by up to 20 basis points (bps), aiming to offer better value to borrowers who have experienced temporary credit issues. The near prime range now includes mortgages available up to 85% loan-to-value (LTV).

As a result of the reductions, two-year fixed rates for near prime borrowers now start at 5.69%, three-year fixes begin at 5.54%, and five-year fixes from 5.34%. The range includes both fee-free mortgage products and those with a £900 arrangement fee.

EXPANDING ACCESS

Atom Bank has made several changes to its near prime offering over the past year to widen access. In 2024, the lender increased the maximum level of unsatisfied registered defaults from £1,000 to £2,500, while raising the threshold for communication and utility bill defaults from £250 to £500. Additionally, the period used to assess default history was reduced from three years to two years.

The banks says these adjustments have contributed to record levels of mortgage applications, with near prime demand rising 10% in Q3 2024 compared to the previous quarter. Year-on-year, applications in October 2024 were nearly double those seen in October 2023.

David Castling, head of intermediary distribution at Atom Bank, said: “We believe brokers and their clients will welcome these reductions, which ensure our near prime range remains competitive in terms of price and flexibility.

“These changes provide more affordable options for borrowers who may have had short-term credit issues but are financially stable.

“The economic challenges of recent years have led to more borrowers falling into the near prime category, despite being fully capable of meeting repayments.

“Our goal is not just to support these customers now but to offer a pathway back to prime lending when their financial position improves.”