Specialist lender Start Mortgages has increased new business by more than 100 per cent this year, according to its UK parent company Kensington Mortgages.

Exact figures are not yet available, but market commentators estimate that Start will have lent €618 million in the year to the end of November 2006.

Kensington also said yesterday that it expects Start to "contribute materially to group earnings growth from 2007".

Start has been operating in the Irish "sub-prime" or "specialist" market for two years, catering for borrowers who have difficulty obtaining loan approval elsewhere due to poor credit histories or being self-employed.

Paul Murphy, head of sales and marketing at Start, said the specialist market is currently worth about €1 billion annually.

"We would estimate that we have the lion's share of that," he said. "There are two players in the Irish market at the moment - ourselves and GE Money."

Mr Murphy describes the market as "embryonic", and he anticipates huge growth in the coming years.

He estimates that the market has the potential to be worth €3 billion to €4 billion a year.

Margins in the sub-prime market are higher than in the traditional mortgage market, and so Start is likely to face increased competition from new entrants.

Lenders such as Permanent TSB and Nua Homeloans are currently looking at the market, Mr Murphy said.