The value of secured loans reached a three-year high in April, according to the Loans Warehouse – a further sign that confidence may be returning to the economy.
A 15% rise in April from the previous month saw the value of secured lending soar above £40 million for the first time since 2010, according to the Loan Warehouse’s Secured Loan Index.
The £41.75 million recorded for April is also a considerable leap on the £26 million in secured lending recorded in the same month last year.
A fall in lending rates since the launch of the Government’s Funding for Lending Scheme in August 2012 has worked to support a momentum of growth in secured lending, which has now seen 18 consecutive months of year-on-year increases.
The demand for these loans, usually secured against property, reveals greater levels of confidence in the ability to repay.
"Breaking the £40,000,000 barrier is a milestone and reaffirms the resurgence of our industry," said Sam Busfield, the Managing Director of Loans Warehouse.
"With the year-on-year monthly figures demonstrating sustained growth, everything is pointing towards 2013 being the real turning point."
"There will no doubt be many challenges ahead but there is an appetite and buzz within the industry not seen for some time," he added.
Secured Lending Protects Home Values
The time is ticking on leases that could render homes unmortgageable. Secured loans could prove a solution.
Secured lending could continue to grow as homeowners look to protect the value of their homes.
Almost 1.5 million homes in England and Wales could fall into negative equity as the elapse of their lease takes them outside of the lending criteria for high-street banks.
If homeowners end up with properties that do not qualify for further mortgages, they will end up unable to sell to anyone except cash buyers.
They can protect themselves from this fate by using secured loans to extend the term of the lease, noted fellow Loans Warehouse MD, Matt Tristram.
"Secured loan lenders will lend with shorter leases that mortgages, and most are happy to lend and assist when the purpose of the loan is to extend the term of a lease," he said.
"This is just another example of when secured loan lending trumps the terms offered by the high street mortgage lenders."
Keith McDonald
Which4U Editor
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