Around 70% of near-prime borrowers have a household income of more than £50,000 a year, according to new research from Atom.
The lender’s new Near Prime Index shows that it’s not just low-income borrowers who face credit problems and may struggle to qualify for mainstream products from major banks.
It found that only around 5% of near-prime borrowers earn less than £30,000 a year.
Around 24% of those taking out a near-prime mortgage earn between £30,000 and £50,000, 36% earn between £50,000 and £75,000 and 19% earn between £75,000 and £100,000.
The analysis shows that 15% of near-prime borrowers earn more than £100,000, with some earning more than £200,000.
First-time buyers represented 52% of all near-prime borrowers, highlighting how these products can play an important role as a stepping stone to home ownership.
Atom found that 31% of near-prime borrowers were movers and 17% were remortgaging.
Richard Harrison, head of mortgages at Atom Bank, said: “This inaugural near-prime index has allowed us to keep the pulse of what is happening in the mortgage market for borrowers with imperfect credit scores.
“And what is clear is that while this is a market segment that looks set to grow, brokers are frustrated with the approach of some lenders.
“Near-prime is not something that only applies to a certain subset of borrowers; a single payment problem can have a major impact on a borrower’s record, and these problems are often caused by a life event or incident rather than poor discipline.
“As a result, it is crucial that lenders take a more open approach and treat such cases proportionately, based on the individual factors at play.”