Atom bank has expanded its near-prime mortgage offering with the introduction of a new £1,995 fee tier, opening the door to lower-rate options for borrowers with minor credit issues.

The new two-year fixed rate products, which start at 4.94%, are available from today and support loan-to-value ratios of up to 90%. The bank said the additional tier gives brokers greater scope to tailor recommendations, particularly for clients seeking to keep monthly repayments down or those borrowing larger sums.

The launch follows the bank’s introduction of a £1,500 fee tier in July, which has proved popular with brokers working with borrowers whose credit profiles fall outside mainstream criteria. Atom said the strong uptake reinforced demand for a broader set of choices for this part of the market.

Over the past 18 months the bank has made a series of adjustments to its near-prime range, all shaped by broker feedback. These have included raising maximum LTV to 90%, accepting higher levels of historical defaults and making several rate reductions. Atom said these changes have contributed to repeated internal records for near-prime activity this year.

The lender has also set out its thinking on this sector through the publication of its first Near Prime Index, a twice-yearly analysis that combines market data, economic research and broker views. The initial H1 2025 edition underlined the need to improve borrower awareness of the behaviours that can push them into near-prime territory.

It also reported strong calls from brokers for more case-by-case assessments, rather than rigid criteria that risk excluding credit-worthy applicants.

Richard Harrison (pictured), head of mortgages at Atom bank, said: “Near Prime is becoming an increasingly important option for brokers who are seeing more clients with some sort of historical credit blip.

“These credit issues are often one-offs, yet they can have a long-lasting impact on a borrower’s prospects. That’s why it’s so important for brokers to have a wide range of options to choose from.”

He said the new fee tier would appeal to borrowers wanting to minimise monthly payments, as well as those with higher incomes seeking larger loans. He added: “There can be misconceptions about what Near Prime borrowers look like, but as our Near Prime Index highlighted, nearly a third of our cases involve households with incomes above £75,000, and so may be looking to raise bigger sums.

“The Near Prime Index made clear that this is an area of the market set to grow in the years ahead.

“Lenders need to be nimble in not only providing competitive products, but also ensuring their assessments are based on each borrower’s specific circumstances.

“Brokers have had enough of lenders’ ‘computer says no’ excuses for turning down applicants who are more than capable of repaying a mortgage.”