Return of sub-prime lender is great news

by John Fitzsimons on 01 December 2009  |  5 comments
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One high-profile sub-prime lender has made a return to mainstream lending. The more the merrier!

There has been a fair bit of positive news about the housing market recently. Prices are continuing to rise, albeit at a pretty slow pace, and lenders are increasingly offering mortgage deals at higher loan-to-values.

But one piece of great news went almost completely unreported last week - the return of Kensington to the lending market.

Back in the boom years, Kensington - one of those lenders that you can only access through brokers or financial advisers - was a massive player, one of the most important sub-prime lenders around. And unsurprisingly, when the crunch hit, it was badly affected, swiftly withdrawing from all lending activity.

However, last week it announced its return to the market. Now, this return is on a pretty small scale, with a small range of products offered by just a couple of distributors. And the mortgages are far from sub-prime - those days are long gone.

But I'm still delighted to see that they are back. Firstly, Kensington had a great reputation as an innovative lender. If there's one thing the mainstream market desperately needs right now, it's a bit of innovation. Bar clever products like the three-year stepped tracker from Yorkshire Building Society, there is an awful lot of 'design by numbers' going on in my view.

Secondly, the more lenders we have active in the market, the better. Ok, so the current products aren't the most attractive around, but they are a start. Hopefully it won't be long before Kensington can launch a product that's new and exciting, and makes the rest of the marketplace sit up and take notice.

The final reason I'm delighted by Kensington's return is that they are an intermediary lender. I am a passionate advocate of the benefits of independent financial advice, and always despair when lenders like HSBC refuse to deal with them. I know that when I bought my house, my broker did an incredible job, and I'm not alone - around 70% of mortgages go through advisers.

It's very early days for Kensington, and for the resurgence of the mortgage market generally, but it's a good sign.

We have our own fee-free advisory service at lovemoney.com, so if you are on the hunt for a mortgage, why not check out our mortgage centre and pick their brains?