As Christmas approaches, the secured loans turkey is not looking quite as plump and succulent as it did this time last year. But to put this into perspective, there is still sufficient meat on its bones for firms to prosper, provided they look hard enough.
There is no doubt that this has been a tumultuous year for the sector and, as it comes to a close, it feels an appropriate time to take a look back at the ups and downs and comings and goings of 2007.
The year started with a sector full of bullish confidence. Through a variety of hard work, education, increased media coverage and broker perception the year ahead was full of optimism. This wasn’t just the case in the secured loans sector – confidence was high across the whole of the mortgage industry and there was more buoyancy floating around than a case of apples at the world apple bobbing championships.
The early part of the year saw high business volumes, with interest in the secured loans market reaching almost epic proportions. There were no shortage of lenders, packagers and even lead generators becoming increasingly vocal about their plans to launch in the sector.
Indeed, research included in the Association of Finance Brokers’ (AFB) March census echoed that a greater number of mortgage intermediaries were considering the opportunities available in the secured loans sector.
The AFB research revealed that half of all respondents, or their firms, offered advice on secured loans, with 40 per cent of firms having between two and 10 advisers able to provide guidance on the products. It added that 56 per cent of intermediaries advised on between one and 10 secured loans in the past month, with 18 per cent of advisers placing business with over 10 lenders. All of which appeared to add to the positive signs for the future.
Much had previously been written regarding the image of the secured loans sector and while providers and master brokers were, and still are, working hard to ‘clean up’ this image, the Summer saw the first birthday of the AFB, a body which has greatly helped improve this poor perception. The beginning of the Summer also saw the Hurstanger case hit the headlines and the rest of the season saw lenders launching new product ranges into the market. However it also saw the departure of Communitas, which gave some hint to the vulnerability being experienced by some lenders.
Autumn saw an upturn in the weather but brought a downturn in conditions being experienced in the sector. Lehman Brothers announced it would be pulling out of the second charge market, closing down Southern Pacific Personal Loans and the recently subsumed London Personal Loans. Victoria Mortgages called in the administrators a few days later as its funding lines dried up and Loans One also disappeared from the market. Bonfire night also saw some fireworks with Money Partners’ announcement that it had pulled its secured loan offering.
Some master brokers were also seen to be feeling the pinch, but I have personally spoken to a few lenders who are waiting patiently to enter the market and a few old names and faces are also biding their time until it is right for them to re-enter.
All in all, it has been a strange old year and in footballing terms, definitely a year of two halves. Looking forward, 2008 is a difficult one to predict and I’m not sure where to start. The impending regulatory changes, the ‘hokey cokeying’ of lenders and the renewed interest from a number of building societies makes the market a difficult one to read but there are certainly some encouraging signs.
Speaking from a personal perspective, my hunger and enthusiasm hasn’t been affected by this rollercoaster of a year and I’m looking forward to 2008 with positivity. It will be a year where quality, transparency and relationships come to the fore. It is important for the sector to pull together in these troubled times and work as one to ensure that we continue moving forward so that we can give the best service and offerings possible to the people that really matter – our client base.