2012 saw gross lending in secured loans surge to £351.9m, exceeding the forecasts made in September’s Index, which predicted gross lending would reach £350m, the latest Secured Loan Index reveals.
The research from master broker Loans Warehouse, taking figures direct from the industry’s lenders, reveals that overall secured loan lending last year increased 23% from 2011’s total of £286 million, illustrating how secured loans became a more mainstream form of refinance in 2012.
Gross lending for the fourth quarter of 2012 was £90.7m, a 27.7% increase on the same period in 2011, where the figure was £71m.
Some £24.5 million was lent in December by UK secured loan lenders, which is a 22.5% increase on the £20 million written in December 2011 and 28.6% lower than November’s gross lending figure of £34.3 million, reflecting the effects of a shorter working month.
December was the 14th month in a row of higher year-on-year lending and was the best December the industry has seen since 2009, where £30m was advanced.
Matt Tristram, joint managing director of Loans Warehouse, said: “Last year saw a real strengthening of the market and our data shows despite the decrease in lending, the secured loans market was still strong in December.
“If we work on the assumption that there were only 15 working days in December, compared to the 23 in November as most of the industry closed early for Christmas, the average lending figure is £1.7 million per day. If December had consisted of only another 8 days and remained consistent, it would have been a record month for the industry, reaching £37.9 million!”
Secured loan rates fell to historic lows in the first week of 2013 and with loan options increasing, things have never been better for borrowers.
Tristram added: “Thanks to Nemo Personal Finance rates now start from 5.59% which is the most competitive ever offered by a lender and available to homeowners with a maximum LTV of 55% looking to borrow between £40,000 and £200,000.
“Borrowers will benefit greatly from these rates; especially those seeking value over a longer term. In many instances, a secured loan will now work out cheaper than a full remortgage for a number of homeowners. If your client wants to avoid losing the benefits of their current mortgage – not to mention avoid the stiff early repayment charges or the costs involved in changing mortgage providers altogether – then hen a secured loan will be a cheaper alternative to remortgaging.
“Nemo has opened up its criteria to more self employed borrowers, offering the same low rates to professional self employed borrowers that employed clients receive. It has also increased the maximum LTV to 90%, the highest LTV it’s offered since 2009, all of which will only increase the number of customers that will qualify for a homeowner loan.
“Next was Blemain, reducing rates and increasing LTVs across its range. At the other end of the market, adverse lender Equifinance announced it had increased its loan size by 50%, a product that will allow clients with severe credit problems to borrow from £15,000 to £30,000, up to 65% LTV at a rate of 1.95% per month.”
Tristram said that lenders are now competing for business and it would be interesting to see if others follow Nemo’s example in an attempt to remain competitive.
And he added: “We’ve all witnessed how keen the second charge lenders are to open up the market and I for one will be watching closely to see how other lenders respond.
“Rates are at historic lows; LTVs and maximum loan sizes are increasing, and the secured loans market is in better shape than it was a year ago. Secured loans are becoming more mainstream as confidence in the sector increases. There is certainly a heightened level of competition in the sector and with new lenders about to enter the market this will undoubtedly lead to continued significant growth in the second charge market over the next twelve months.”
Sam Marshall, of Nemo Personal Finance, said: “Nemo has both the desire and ability to increase new business origination. We remain committed to the development of the secured loan market and to our broker partners. Our recent product enhancements can only be good news for customers and brokers alike.
“We believe that the new product range will deliver 40% uplift to our new business origination in 2013.”