Secured lending figures in January increased by £6,500,000 (16%) on December 2013 and £14,600,000 (43.95%) on the same time last year, according to Loans Warehouse.
Its Secured Loan Index found that January was the 27th month of successive year on year growth for the second charge market.
Nick Parkhouse, senior director at RBS Financial Institutions Structured Finance, said: “Another month and, weather aside, the positive news keeps coming. The secured loans industry has seen its 27th consecutive month of year on year growth, the FLA announced a further fall in repossessions by secured lenders during Q4 (13) and a number of secured loan lenders announced during January they were launching into Northern Ireland.
“Northern Ireland brokers finally have a reason to smile. Having spent almost four years with little or no options available to them, there is now competition with Clearly Loans and Central Trust launching products available in Northern Ireland.
“Clearly Loans was first to launch, with rates from 13.9%, loans to £50,000 and a maximum LTV of 75%. This was swiftly followed by Central Trust who are offering loans of £30,000 and LTV up to 60%, the difference in criteria meaning both products are in demand.
“The UK economy seems keen to jump on the good news bandwagon as well with unemployment dropping to 7.1% and growth of 1.9% in 2013 the UK’s strongest levels since 2007. Even the Eurozone, key because of its trade links with the UK, decided to get in on the act and reported positive GDP of 0.3% for the final quarter of 2013.
“All in all it would appear that there are a number of positive factors that are underpinning the secured loan market in greater consumer confidence, start of an economic recovery and increased competition leading to more choice and lower pricing for consumers. This has played out in the numbers during 2013 which finished the year at £493m and has continued its strong performance with £47m in January. This should be positive for the 2014 numbers and give support to continued growth in the secured loans market; however what should we be looking out for?
“At some point interest rates will rise and there is a question around the potential impact on loans. From what I have seen so far, stressed I&E’s, sensible loan to value levels and good underwriting discipline should help to part mitigate. A more interesting question is how many lenders will pass any rate rise on and do they have a strategy as to how they will deal with this? Secured loans have long been variable rate – could we start to see an increase in fixed rate product?
The environment for writing secured loans over the last few years has been good and much of it down to lenders setting and following sensible underwriting criteria. While some loosening of criteria is to be expected as the economy recovers, as competition increases continued discipline will be important to ensure that loss levels remain within acceptable levels and that the lessons of the financial crisis are not forgotten.”
