The growing importance of Near Prime to brokers and their clients was evident during our recent webinar, where brokers were polled on both the current and expected demand levels for Near Prime products.
The vast majority of brokers (81%) reported an increase in clients who either had adverse credit or had failed traditional credit scores over the last 12 months.
It’s interesting to note that this figure is actually down from the last time we held a Near Prime webinar in December and quizzed brokers on this question, when 93% confirmed seeing an increase, but nonetheless it highlights the fact that Near Prime is on the rise.
What’s more, it is expected to grow further still, with 89% of attendees expecting to advise more clients on Near Prime products over the rest of 2026. That’s a sharp increase on the 74% who predicted further growth at our previous webinar in December.
It’s a clear sign that we are still just scratching the surface of Near Prime, as the payment challenges of recent years feed into would-be borrowers with imperfect credit records. The issues they experienced may have only been short-term in nature, yet the long-lasting impact it has on their credit profile and borrowing prospects can be significant.
It also shows that, as an industry, we have a lot further to go to support these borrowers in getting onto, or up, the housing ladder.
EDUCATING BORROWERS
As part of the webinar, brokers were also surveyed on financial education. Last year plans were announced for an overhaul of the national curriculum, with pupils set to receive a better grounding in financial literacy, and we asked brokers which aspects they felt would be most impactful.
Understanding the true cost of debt and how it can build up, was the most popular option, selected by one in five brokers (21%). It was followed by avoiding problem debt, and credit reports and credit scores, both of which were pinpointed by one in six brokers (14%).
This theme of the need for borrowers to have better education around debt and their credit profile has emerged consistently when compiling the Near Prime Index reports to date.
The latest edition includes an in-depth look at first-time buyers, a subset of borrowers who brokers pointed out are particularly liable to damaging misconceptions, from underestimating the impact of missed payments on ‘buy now pay later schemes’ on their credit score, to believing that if they have an adverse credit history, they have no chance of accessing a mortgage.
Improving the next generation’s understanding of money matters will help them make more informed decisions. In the meantime, however, there is still a great deal of work for brokers and lenders to do with the current crop of potential buyers, so they have a better grasp of where they stand and what is needed to regain Prime status over time. The role of broker today encompasses being a teacher as much as a guide.
DOES IMPROVING APPETITE GO FAR ENOUGH?
The increasing number of clients who fall outside of Prime criteria emphasises the need for a larger Near Prime market. Brokers want to see more appetite from lenders in this area, with greater competition driving up standards and providing clients with a range of options from which to choose.
And on the surface there is some cause for optimism here, with three quarters of brokers polled for the Near Prime Index reporting an increase in appetite for credit impaired cases from mainstream lenders in the preceding six months.
However, given the surveys for the Near Prime Index itself were carried out ahead of the conflict in Iran, and subsequent turbulence we have seen throughout the mortgage market, there is a danger that there has since been a reduction in interest from these lenders. It’s also worth emphasising specific gaps where brokers are keen to see more options for their clients, particularly around higher LTVs.
It’s not enough for more lenders to simply enter the Near Prime market; what would be most impactful is for lenders to show more appetite for the underserved areas of this already overlooked part of the mortgage sector.
Speak to brokers, and it’s clear that not only is Near Prime demand on the rise, but it is likely to grow further still. Lenders need to grasp the nettle, and work closely with brokers to understand what Near Prime borrowers need and how we can support them over the long term.
