Secured lending hits £50m for first time since 2009

The total lent across the industry was an impressive £50,371,440, which sees 2013 lending to date now 18% up on the whole of 2012 and total annual lending has broken £400,000,000 for the first time in four years October saw 80% of secured loan lenders report month on month increases in lending to the Index.

The number of second charge mortgage possessions in the third quarter of 2013 was down to 144, 11.7% lower than in the same quarter in 2012, according to the latest data from the Finance & Leasing Association.

Matt Tristram, Co-Founder & Director of Loans Warehouse & Clearly Loans comments:

“The last few weeks have seen some encouraging headlines; the drop in the rate of headline inflation to 2.2%; the Land Registry announced annual house price growth of 3.4%; and mortgage approvals are at their highest levels since February 2008. But, for me, the most telling figure is that second charge mortgage possessions fell 11.7% against the same quarter in 2012, according to the Finance & Leasing Association.”

“I don’t think I’m speaking prematurely when I say the worst of the credit crunch is behind us in the second charge market, but continued growth must be sustainable. Critical to this positive future trend will be good advice from brokers matched by sensible lending decisions, with the backdrop of new FCA regulation.”

“The latest figures from the FLA demonstrate that, in the past, the secured loan industry made responsible lending decisions to borrowers who can afford their loans, and we expect that positive picture to be reinforced by a new regulatory structure.”

“Through the month, we have seen criteria improvements from several lenders. Manchester based Blemain Finance have revamped its range and in doing so introduced its first single digit loan rate since the credit crunch. Norton Finance backed by recent additional funding have for the second month running reduced their headline rates, also taking the lender to single digit loan rates.

“The long awaited launch of Precise Mortgages Secured Loans edges ever closer. In attendance at this year’s FP Show, Simon Carr, Director of Secured Loans at Precise, released the first information on its new range due to launch later this month. This includes rates from 5.45%, LTVs up to 85%, and loans up to £1,000,000. More interestingly, product uses include deposit raising for buy to let, paying tax bills & business purposes. All three purposes have been areas secured lenders have traditionally avoided.”

"The biggest news came from Prestige Finance. On 11 November, headlines read that the OneSavings Bank owned lender would offer secured loans up to a maximum of £2,500,000. Rates start from 6.5% for deals up to 55% LTV, with the highest LTV on the larger loan plan being a maximum of 75%, which is priced at 9.4%.

"Before the credit crunch, there was no demand for a product of this scale but in an environment of restricted lending criteria from banks and building societies, and where bridging finance has grown as a niche market, this new loan product will meet a niche borrower demand from wealthy borrowers."

Director Simon Stern stated:

“Prestige Finance is going to be a major secured loan player in 2014 and thanks to the backing of OSB, our new offering demonstrates that not only do we have the ambition but we are also ready to demonstrate our resolve through these latest enhancements and new product plans.”

Other criteria changes from Prestige saw their maximum LTV increase to 85% and an increased tolerance for mild adverse credit.

Shawbrook also announced a raft of changes to their pricing with rates reduced on their 3 year fixed rate product, along with the introduction of their first 5 year fixed rate plan, and the reduction in the lender fee on smaller loans. There were also criteria changes to the Platinum range, with increases to the maximum LTV to 75% and the loan size from £200,000 to £500,000.

Whilst new entrants are good for competition in the market, lenders like Nemo Personal Finance have been the corner stone of the secured lending industry. With recent high profile changes at the Cardiff based lender, we took the opportunity to get to know the new Head of Sales, Jo Edwards.

Jo started out her career at FirstPlus 11 years ago on their direct sales team, before joining Nemo in 2006 when she wanted a new challenge. Jo’s recent job role involved managing the Direct Sales team and in house broker function at Nemo; Loan Link. This gave Jo a wide knowledge of the market and an understanding of the requirements needed to balance dealing with customers and getting deals completed for Nemo.

Jo said:

“It’s great news for the second charge industry to see another month of growth with lending over £50,000,000 for the first time in 4 years. It’s an exciting time with new entrants arriving and competitive rate changes from lenders ahead of a new regulatory regime in 2014.

“Our commitment to brokers will continue into 2014 characterised by our clear underwriting terms & conditions, reliable referral decisions, packaging support, and speedy payouts.

“2014 promises to be an interesting year for all involved, with increased competition, impending industry changes, and new regulation. We’re in a strong position as we approach the New Year to take on these challenges and are confident of contributing towards further sector growth in 2014 with our competitively priced prime products and consistent broker service.”

Michael Coogan, Strategic Adviser at Loans Warehouse, responded to the news that there had been substantial interest from first time buyers since the launch of the Help to Buy mortgage guarantee scheme last month.

He said:

“The new government scheme will continue to grow as more lenders launch products in the New Year. In the meantime, the mortgage market is 'open for business' according to the CML, and this is reflected in a range of lenders offering higher LTV products at 95% outside the help to buy scheme.

“Increased activity in the market will continue to flow through to higher activity levels for secured lenders and brokers as well, with increased consumer confidence and a large group of home owners unable to remortgage or get a further advance from their mortgage lender.

"With Christmas on the horizon, the key for borrowers is to take realistic views on what they can afford and make sure they can continue to pay their loans even if interest rates were to increase sooner than previously anticipated.2014 is the year in which secured loans will grow from strength to strength.”