August lending figures show a month-on-month drop of 13.65% - which is just short of £7,800,000 - however, comparison to last year's figures suggests a seasonal adjustment as the figure is up 22% year-on-year. These figures continue the recent trend of consistent monthly year-on-year growth, now standing at its 33rd consecutive month.
In addition, the number of lending products and lenders has reached a post-2008 peak; there are now 220 secured loan products available from 17 different lenders.
The report noted that it was expected that many lenders would make changes to their criteria in October.
Sam Busfield, Co-Founder & Director of Loans Warehouse comments:
"Welcome to a slightly delayed edition of the Secured Loan Index, mainly due to the recently announced consultation paper from the FCA 'Implementation of the Mortgage Credit Directive and the new regime for second charge mortgages'. It’s a very interesting read and any responses need to be with them by 29th December 2014. They will start full regulation of second charge mortgages on 21st March 2016.
"Secured loans are going to now be classed as 'regulated mortgage contracts' and therefore be in the same category as first charge mortgages. The FCA are proposing to apply most elements of current first charge regulation to secured loans.
There is no doubt that there are going to be additional restrictions in place, the most obvious of which is surrounding affordability. There will be much greater emphasis placed on income and expenditure, and stress testing both the secured loan and first mortgage payments.
"Will that lead to some applications that would have been written today not being written in the future? Undoubtedly. However, it is by no means all doom and gloom. This is a genuine opportunity for our industry to seize. Being regulated on a par with first charge mortgages also means being considered.
"When a consumer is looking to raise additional funds they must be made aware of other possible options; remortgage, further advance, and secured loan. This can be done as part of an initial disclosure rather than as part of the sales process but it means that we are now going to be in the consciousness of a whole new audience and that is a major opportunity for us all.
"Given the risk of consumer detriment, we want to embed good practice and we believe that applying our mortgage rules is the best way to do this.
"One of the FCA’s main concerns regarding secured loans was poor practice - not making consumers aware of other available options, poor affordability assessments, the charging of fees etc. So what is that going to lead to? Working in an FCA regulated environment will mean qualifications need to be gained, that information provided is more standardised and that consumers feel more confident in the businesses and people they are dealing with.
"Fixed rates, the charging of fees, ERCs - rather than the prescriptive rules of the CCA, the lenders in our industry - who have proven time and again their appetite to lend and their creativity - will now have the opportunity to design products for a whole new landscape.
"It is going to be challenging. It is a big change for all of us. It is also the opportunity for an industry that refused to be beaten by the recession to seize, work with and grow."
