Whilst figures for December show a decrease of 12.71% from November, this is in line with seasonal changes and still represents a 66.5% increase on the previous year - an incredible rise.
Q4 has been the biggest quarter the industry has seen since 2009 at £138,470,000, and December marks an incredible 26th month of successive year on year growth.
Matt Tristram, Co-Founder & Director of Loans Warehouse & Clearly Loans comments:
“The FLA revealed last week that overall consumer finance new business grew by 6 per cent year-on-year, with secured loans showing the biggest percentage increase.”
The past year has seen the arrival of five new lenders; Clearly Loans; TFS; Firmus Secured Loans; FinSec & most recently, Precise, whilst Spring Finance has also rebranded as Watchtower.
The increase in lending has been attributed to a number of factors including bigger loans, cheaper rates and higher LTVs. Throughout the year a rate war has resulted in record low rates with the lowest rate currently standing at 5.4%. Additionally, loans available are larger than ever before; for example, earlier this year Prestige matched Blemain’s industry-leading maximum loan of £500,000 but with a much lower lender fee and as the year progressed Shawbrook also moved its maximum offering to the half a million mark. When Precise launched in November, its plans went up to £1,000,000 although Prestige took the top spot with a product that went up to £2,500,000.
The Loans Warehouse index suggested that the trend of new lenders moving into the secured loan market is 'sure to continue' in 2014, noting that United Trust Bank, Paragon and Aldermore are all rumored to be looking to release a secured loan range this year. More new lenders are also expected to emerge including Optimum Credit, fronted by several ex-Nemo Personal Finance directors.
Matt Tristram continued:
"For me this will be the year that secured lending will make its mark on BTL lending in a big way - it’s the most obvious area where there can be growth. First charge lending on rental properties has been growing year on year whilst secured loans have just dipped their toe into this area – Who knows, we may even see the UK’s first BTL specialist secured loan lender."
Growth in Scotland appears likely, as several lenders still have restricted lending, and more lenders are likely to look at lending in Northern Ireland with just Clearly Loans & Evolution Money currently offering products across the water.
Michael Coogan, Strategic Advisor at Loans Warehouse was asked for his views on what the change in regulation will mean for the second charge market.
He said:
“2014 is a momentous year for the lending industry in the UK. Within the secured loans sector, demand will ensure market growth continues, and loans will be at historically attractive interest rates. What is less clear is how and when the move to a new regulator will change the structure of the secured lending and broker sectors. Unless the FCA chooses to carry out thematic work into how the market operates, as part of its business plan for 2014, I would suspect that the most significant impact will be felt not this April, or indeed in 2014, but rather when the UK implements the European Mortgage Directive. Further FCA consultation is planned in the spring, and it is at that stage that structural changes in the market may be easier to identify.
"In the meantime, for mortgage prisoners who can afford to borrow, and can do so responsibly, the secured loan sector will continue to fill the gap created by risk aversion in the mainstream mortgage market."
