Latest Atom bank Near Prime Index highlights plight of first-time buyers with imperfect credit scores
20 April 2026
- Report for H2 2025 finds cost of living pressures becoming more pronounced driver for Near Prime applications according to brokers
- Three quarters of brokers expect to see further growth in Near Prime demand in months ahead, while appetite from mainstream lenders for adverse cases is rising
- First-time buyers account for an increasing proportion of brokers’ Near Prime clients, while Atom’s customer data suggests the majority of Near Prime customers are first-time buyers
- Calls for more high LTV options, with deposit size pinpointed by over a third of brokers as the biggest barrier to submitting applications for Near Prime first-time buyers
Atom bank, the UK’s highest ranked bank on Trustpilot*, has released the latest edition of its Near Prime Index, with a particular focus on the challenges faced by Near Prime first-time buyers.
The Near Prime Index is published biannually, and combines analysis of economic data, Atom bank lending figures and a survey of mortgage brokers who handle Near Prime business across the UK.
The index covers H2 2025, and shines a light on the different types of Near Prime borrowers brokers are likely to see, distinguishing between those already on the housing ladder but with adverse credit, and first-time buyers who fall outside of Prime criteria because of a thin credit file rather than genuine payment blips.
Key findings from the H2 2025 Index include:
- Defaults remain the biggest contributor to Near Prime status, appearing in 73% of Atom bank cases
- Cost of living pressures have become a more significant catalyst for Near Prime, cited as the primary reason by 71% of brokers surveyed, up from 62% in the last Index
- Other key factors include increased reliance on consumer credit (56%) and the impact of life events (48%) according to brokers
- Demand for Near Prime is expected to continue to grow, with two-thirds (65%) of brokers forecasting a slight increase, and 12% predicting a significant jump.
- Lender capacity for adverse cases is improving, with more than three-quarters (77%) of brokers reporting an increase in appetite for such deals from mainstream lenders over the last six months, and one in 10 (12%) noting a significant increase
- The price premium faced by Near Prime borrowers, compared with Prime borrowers, has decreased over the last 12 months, brokers say, suggesting competition is pushing prices downwards.
Different types of Near Prime borrower
It’s important for brokers and lenders to understand that not all Near Prime borrowers are the same, with the Near Prime Index identifying two typical profiles borrowers tend to fall into: The Rehabilitator and The Starter.
Rehabilitator borrowers tend to be older, with an average age of 40, are already on the housing ladder and looking to borrow at LTVs of below 85%. They have fallen into Near Prime because of previous credit issues, usually sparked by a life event such as a divorce or job loss. They are more than capable of servicing a mortgage, but require a lender willing to look beyond their headline credit score.
Starter borrowers are younger, generally around 35, and looking to access the housing ladder for the first time. They are typically looking to borrow at around 90% LTV, and have lower average household incomes than Prime borrowers looking for the same LTV levels (£58,000 compared with £70,000).
The Index also makes clear that high LTV lending is not synonymous with higher risk. A fifth (20%) of Atom bank Near Prime borrowers at 90% LTV have no adverse events in their record, while 29% have only one. These borrowers are falling into the Near Prime category because of a lack of credit exposure or missed payments, which do not lead to defaults or CCJs, rather than because of a lengthy history of credit issues.
The first-time buyer challenge
This edition of the Near Prime Index looks in greater depth at the challenges faced by Near Prime first-time borrowers, given data showing its growing importance for those hoping to take their first step onto the housing ladder.
- Near Prime skews towards first-time buyers among Atom bank’s customer data, with 59% of all Near Prime borrowers attempting to take their first step onto the housing ladder, compared with 41% of Prime borrowers.
- First-time buyers also account for an increasing proportion of brokers’ Near Prime clients, representing an average of 30% of their client numbers, up from 25% in the last Index.
- More than a quarter (27%) of brokers pointed to a ‘thin file’, rather than actual payment issues, as a particular problem for Near Prime first-time buyer clients. Research from Experian suggests around five million people in the UK are effectively invisible to the credit system due to a lack of financial data.
- Deposit size was pinpointed by more than a third (36%) of brokers as the single biggest barrier to submitting an application for Near Prime first-time buyers, highlighting the need for more high LTV options.
- LTVs were identified by 39% of brokers as the most crucial feature they look for from a lender, ahead of a flexible approach to credit history (38%).
Richard Harrison, Head of Mortgages at Atom bank, commented:
“The housing ladder only functions if first-time buyers can access it. However, as our latest Near Prime Index makes clear, that accessibility is increasingly reliant on lenders being more flexible over the credit profile of the borrower, whether that’s due to payment hiccups in the past or simply the fact that the borrower has little credit history to speak of.
“A broader range of high LTV Near Prime products is essential, with the LTVs on offer often the primary driver for lender selection. While brokers have reported seeing greater levels of competition among mainstream lenders, this progress may have stalled due to the current market uncertainty. We must hope that progress not only resumes when the conflict concludes, but that we see it result in greater choice for borrowers at all deposit levels.”
David Castling, Head of Intermediary Distribution at Atom bank, added:
“In the last Index, the proportion of brokers’ Near Prime clients who were first-time buyers stood at 25% on average, but it’s now risen to 30%. Near Prime is evolving into a crucial access option for those looking to get onto the housing ladder, with buyers increasingly reliant on lenders who can treat apparent credit problems on a case-by-case basis.
“First-time buyers and existing homeowners alike are seeing the impact of cost of living pressures, with the effects of rising bills and persistent inflation pushing more borrowers into the Near Prime category. Brokers have been clear that lenders need to take a more details-based approach to these borrowers, getting a better understanding of their specific circumstances rather than viewing all adverse credit the same way.”
Murray Ewing, Operations Director of broker The Lending Channel, commented:
“An imperfect credit score should not be seen as a life sentence. However, there are some lenders who will fail a customer based on minor issues, like a default, rather than looking at what caused it, and why.
“Life events, like a job loss or a death in the family, can impact anyone. But even when the event has been resolved, the mark remains on the credit file. I’d like to see lenders have more empathy towards borrowers, more understanding towards what can be a one-off issue.”
