Non-conforming mortgage business is currently on the increase according to broker research from GMAC-RFC.
A survey of mortgage brokers, carried out by GMAC-RFC following a record number of non-conforming applications in March, revealed brokers are now far more active in the non-conforming sector, with over 90% claiming they expect to see the sector increase in 2006.
Results of the survey show 96% of brokers believe the non-conforming sector as a whole will increase in 2006, while 95% believe their own business in this section of the market will grow.
It also revealed 57% of the brokers non-conforming business is within the Near prime area of the market, while the key driver in choosing a lender is the interest rate, followed by low fees and the service offered.
GMAC-RFC’s research also revealed some of the main reasons a client would enter the non-conforming market, which is any mortgage that doesn’t conform to standard or prime lending criteria, and includes products for people with poor credit history and other forms of non-standard lending such as self-certification.
Poor financial management was cited in the survey as the main reason why a client would be non-conforming, while divorce was also shown as a key driver, with 13% claiming this as the main reason.
Jeff Knight, spokesman for GMAC-RFC, says non-conforming has definitely come of age and there are many reasons for this, such as brokers having a much better understanding of the market, while many misconceptions have now been quashed.
He adds: “Technology has removed the complexities put of the application process, particularly where cascade is available. Products are now very keenly priced and having global brands dominating this sector is good news for everyone. Because the market has reached maturity, now is the time to expect new market entrants, which will be good for the market.”
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