The Secured Loan Index reports another milestone in secured lending today with the £45,000,000 barrier being broken for the first time in nearly 4 years; this was after nine of the 12 lenders reported month on month increases in July 2013.
June’s figure was a slightly disappointing £41,994,482 but the longer month of July has proved positive with lending figures jumping up by 10.2% to £46,305,181.50.
July 2013 shows a monthly year on year growth of 44% compared to July 2012 figure’s of £32,000,000 – in 2013 it took until October to lend as much.
Matt Tristram, joint managing director of director of Loans Warehouse and co-founder of lender Clearly Loans, said: “Despite the continued growth, new figures released by the FLA earlier this month show that the number of repossessions in Q2 of 2013 continues to be at an all-time low, just 183.”
Geraldine Kilkelly, chief economist at the FLA, added: “While the volume of repossessions has risen in the second quarter from a very low base in 2012, the possessions rate has actually fallen from 0.08% in Q1 2013 to 0.06% in Q2 2013.”
Despite the size of the sector, the secured loan industry is one of the few financial areas where the broker has the responsibility for instructing and paying for a valuation.
Clients cannot be charged an upfront fee so it is down to the broker to cover any arrangement costs, including that of the valuation, unlike in the mortgage or bridging finance sectors.
The much reported valuation issues of recent months have seen appointment times for London and some Home Counties in particular taking weeks, even months in the worst affected areas.
This has led to some of the industry’s surveying firms using the situation to increase valuation fees.
However, several secured loan lenders, including Prestige Finance, have started to accepted the use of desktop valuations for the first time since becoming part of the One Savings Bank group, whilst other lenders are turning to smaller valuation firms for improved service levels.
The lenders within the secured loan sector are continuing with their desire to lend more.
Tristram added: “Since last month’s Index we have seen Equifinance relax their property restrictions and start lending on flats, Blemain have reduced their minimum time in employment and Shawbrook have demonstrated once again that they listen to their brokers by simplifying their products.
“Lenders are showing that they can be flexible. Not everything can be written into criteria; if a deal makes sense for the lender and the client then secured loan lenders are happy to make exceptions to ensure a deal completes. Something that is not always so available in the first charge market.
“We are by no means “out of the woods” yet, but the signs of recovery continue to be most evident in the secured loan market. Almost without exception the lenders are looking to improve their criteria, increase their lending and grow the market. All of which is good news.”
It was reported earlier this month that research carried out by bridging lender United Trust Bank suggests the majority of bridging loans take between two and four weeks to progress from application to drawdown.
Tristram said: “Whether it’s your opinion that this is ambitious or reality, what it does suggest is a bridging loan is no quicker to arrange than a secured loan, with the latter benefiting from no upfront costs, no legal fees and on the whole lower rates.”