UK Secured Loan lending hits highest level for 42 months

SUTTON COLDFIELD, U.K. - April 19, 2013 - PRLog -- March saw UK secured loan lending break the £35 million barrier for the first time in nearly four years, with an actual figure of £36.24 million. It is also a record breaking 17th consecutive month showing a year-on-year increase in UK secured lending and so far there are no signs of this trend slowing with lenders competing for their share of the lending opportunity. Managing director of Which? Mortgage Advisors, commented: “We are receiving a growing number of enquiries where clients are in the scenario of having a great product on their existing borrowing but unable to raise additional finance without losing their competitive product, an offset facility or potentially to having change their repayment strategy. With the range of secured loans available and new product launches with competitive rates, secured loans need to be considered in our research if we want to provide comprehensive advice to our customers.”

A record breaking start to the year was almost inevitable after the raft of positive changes introduced by the industry’s major players, rates at an all-time low for second charge lending from just 5.7% and loan to value ratios increasing to 90% and 95%. That said a record breaking quarter with over £100 million lent and March figures of over £36 million in such a short month was a pleasant surprise for the industry.

Buy-to-let secured loans

Last week also saw the launch of the UK’s cheapest buy to let secured loan from the UK’s biggest secured loan lender, Shawbrook Bank. The first sub 10% buy to let secured loan has been released allowing borrowers to lend up to £75,000. As with buy to let mortgages part of the assessment is based on the buy to let rental income available for the property being used for the secured loan. This is the cheapest buy to let second charge on the market today taking the number of secured loan providers lending on buy to let properties to five. Managing director of lending at Shawbrook Bank commented on the launch of the new range and said: “We have listened to our introducers and agree with them that this is very much a growing market, which is also very much underserved; and we are delighted to add this facility to the suite of existing loan plans.

Regulation changes

The last month has seen the start of what will become the most significant change to the UK secured loan industry for almost a generation – the regulatory migration from The Office of Fair Trading to the Financial Conduct Authority. To date no definitive decisions have been made on the future regulations but the consultation period has started and more detailed rules for the new regime are expected later in the year. The regulation of UK secured lending transfers to the FCA on 1 April 2014. Firms holding an OFT licence will be able to continue to undertake consumer credit activities and will hold interim permission until full authorisation is granted. The FCA will be responsible for the regulation of all consumer credit, not just secured loans in the UK.

Utilisation of secured loans

Secured loans in the UK come in many forms which include, but are not limited to: debt consolidation loans, home improvement loans, car purchase loans, bad credit loans, adverse credit loans, self employed loans and special purchase loans. The most common use of secured loans in the UK is for debt consolidation with approximately 75-80% of all secured loans having an element of debt consolidation. As UK secured loans are available for almost any purpose many loans are used for multiple purposes which allow people to raise additional finance whilst at the same time clearing existing credit to give them just one manageable monthly payment.

Despite the increase in UK secured loan lending the remortgage market has continued to be very active and for some customers a remortgage is still the best way for them to raise the finance they need. The decision to take a secured loan or remortgage if both options are available should really be made with the assistance of an adviser who will be able to highlight the benefits of each and based on individual circumstances give advice as to which option is most suitable for their needs and requirements. Whole of market mortgage brokers should be in a position to offer this service which will help ensure the correct solution is chosen for each customer.

UK mortgages and remortgages, like secured loans, are available for many purposes and can provide the ideal solution for people looking to restructure their finances into one lower manageable monthly repayment by arranging a debt consolidation mortgage. Subject to individual circumstances other types of remortgage are available such as: bad credit remortgages, adverse credit remortgages and self employed remortgages. Most mortgage lenders in the UK offer a range of products including fixed rate mortgages, tracker mortgages and off-set mortgages to name but a few. The type of mortgage most suitable to each customer should again be assessed by an independent mortgage adviser based on the needs and requirements of the customer.

For more information about UK secured loans visit http://www.caboodlefinance.co.uk/Index.asp?T=Loans-Secured-Loans-4

Visit http://www.caboodlefinance.co.uk/ for finance advice from a UK secured loan broker

To find out more about mortgages and remortgages in the UK visit http://www.caboodlefinance.co.uk/Index.asp?T=Mortgages-Remortgages