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Best May since 2008 prompts secured industry optimism
Secured lending’s best May on record since 2008 has driven many of the second charge lending industry’s leading lights to confirm that the sector is in rude health.
A total of £43,780,000 was lent across the sector in May 2013, according to Loans Warehouse’s Secured Loan Index, in what marked the industry’s 19th consecutive month which showed year-on-year growth.
The figures recorded proved to be a 4.8 per cent increase on those seen in April, which were ground-breaking themselves, as the brokerage reported that five secured lenders had themselves recorded record months.
May’s total also represented a 50 per cent increase on the amount seen to be lent in May 2012, when only £126 million worth of loans were provided.
The figures have prompted a degree of reaction from across the second charge market, with most saying that the stats recorded mostly reflect trends seen in their own transactions.
Director of Brightstar Financial’s Secured Loans division, Bradley Moore, told us that the reported statistics reflected what he had seen himself at the Essex-based distributor: “Our experience is that the market for secured loans is growing faster than at any time in the last five years, which backs up figures from a variety of sources.
“There is no doubt that apart from the growing number of reasons that secured loans make more sense than remortgages, brokers are really getting tuned into the simplicity, lack of upfront costs and transparent charging structure that modern secured loans are all about.”
He added: “Our new business definitely reflects this upward trend with more new introducers coming to the conclusion that secured loans are a particularly valuable weapon in their lending armoury.”
Paul Smart, Director at secured brokerage Smart Money Loans, added: “The official figures are generally reflective of the way our business has developed. Our volume is up 32 per cent in terms of numbers of deals, and gross lending by 56 per cent. The average loan size is also growing: ours is now at £42,000 against £35,000 last year.
He went on to say: “It is clear that new lenders coming have helped to showcase the sector and the general need for simple personal borrowing is coming more naturally to the secured loan sector. We are seeing a big jump in the need for large loans which reflects a wider disillusion with remortgaging, as well as a positive reaction to the low rates being offered.
“I would be interested to see just how much growth is coming from the BTL sector at the year’s end as well, as our experience is of a growing need there.”
Malcolm Scanlon, Director at Niche Financial, added that such figures would only be bolstered by new market entrants in the future. He told us: “On the face of it, such figures are excellent news for the second charge industry and highlight the fact that the market is getting increasingly strong.
“Obviously, another month of year-on-year growth is one of the biggest headlines to come from this month’s index, which can only be positive news and an indication that the market is expanding. Lenders seem to be coming into themselves far more and appear to be more confident with their own criteria.”
Malcolm concluded: “With more funders coming into the arena of the next few months, the whole sector should continue to strengthen.”
In light of a number of recent arrivals to the secured loans industry, many existing lenders are bolstering their own options in order to better compete. Buster Tolfree, Leading Operations Manager at Central Trust, has overseen a number of changes to the lender’s offering. He said: “A core component of how Central Trust operates is to identify our target consumer needs, and then offer a service and product range that matches those requirements.
“The criteria and packaging changes which we have recently announced have been based on valuable feedback from our introducers, and from our understanding and experience in the wider second charge market. By making these amendments we will be able to provide an enhanced service to our introducers, with the end consumer benefiting as a direct result.”
By Laurence Havelock
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