Some 88% of brokers are expecting to write more secured loan business when consumer credit regulation comes into effect in April, a recent broker survey has discovered.
Figures from The Loans Engine Broker Stance Survey also revealed that 25% of brokers have seen the levels of secured loan business increase by 50% compared to a year ago and 48% of respondents reported they didn’t even recommend secured loans until 2013, reflecting the effects product innovation has made to the sector over the past 12 months.
Tom Garratt, head of intermediary channel at The Loans Engine, said: “There is a clear optimism from brokers when it comes to secured loans and you can gauge how the industry is going to move in terms of growth.
“But more importantly, these results highlight just how regulation of consumer credit is going to impact the industry as a whole.
“The FCA wants to ensure that borrowers are treated fairly and are being provided with all the information to make informed choices that meet their needs and has already decided that secured loans are a potentially suitable alternative to remortgages and further advances.
“Anyone that ignores them completely will be taking a very risky approach- the days of saying “we don’t sell it so we don’t have to think about it” are likely to be over.”
Garratt said that regulation will also represent a step-change in the way our industry is governed.
He said: “The higher standards of professionalism will make many brokers feel more comfortable, especially when referring to third party providers that are regulated by the FCA, as they feel they are more likely to be dealing with people they trust to treat their customers fairly- this trust will be integral to driving success in 2014.
“2013 was certainly a ground breaking year, represented by the 48% who revealed they didn’t even recommend secured loans until 2013. Product innovation was the main driving force here as lenders across the board made significant changes throughout last year via rate drops, increases in LTV and record breaking loan amounts.
“2013 was the year we saw Shawbrook Bank introduce a 95% LTV product, Prestige Finance increase their loan offering to £2.5m and Precise Mortgages launch in to the market with a market leading 5.45% rate.
“More networks scrambled to ensure they had a secured loan product provider on their panel, not to mention the several new lenders that entered the market. And things look set to get better. With 88% of mortgage brokers certain they’ll be writing more secured loan business this year, the rate of growth in the secured loans industry shows no signs of slowing.
“However, 2014 will be a testing year for many. But one thing is clear: it’s never been more important for borrowers to have access to whole of market advice.”
Maeve Ward, sales director – secured lending, Shawbrook Bank, added: “2013 certainly was a fantastic year for Shawbrook and indeed the whole secured lending industry, with many brokers and lenders alike breaking lending records.
“2013 however was just the tip of the iceberg and we expect the next year to be another record breaker. What will be fuelling this growth is the introduction of the regulation, which is a hugely positive step in helping secured loans to become more mainstream and increase public awareness that secured loans offer a real alternative to a remortgage.”