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First month under FCA sees 12.15pc secured dip

Robyn Hall

May 20, 2014

Year to date secured lending remains up 40% on 2013, standing now at £200, 401, 597 compared to £142,300,000, the 29th month in a row it has risen.

Matt Tristram, co-founder and director of master broker Loans Warehouse and lender Clearly Loans, said: “Many industry experts have told me, when a new regulator is introduced there may be an initial ripple. That is exactly what I would put April’s drop in lending down to and fully expect May to be breaking new ground.

“I know from our own experience that whilst we felt well prepared, we found ourselves asking questions we’ve not asked before; not a bad thing but it was a distraction from the usual business flow whilst you learn and adapt to a new regulator.

“The change of regulator means that there are going to be challenges ahead, but as an industry we are in a fantastic position to embrace this and put secured loans back on the financial map and there’s reason for confidence with details announced last week showing annual prices 8.5% higher in the three months to April than in the same three months last year, whilst at the same time the Finance & Leasing Association (FLA) reported a 43.4% fall in second-charge mortgage repossessions in Q1 2014, compared with the same period last year.”

Geraldine Kilkelly, head of research and chief economist at the FLA, said: “The rate of repossessions in this market remains low at 0.049%, reinforcing lenders commitment to helping borrowers in financial difficulty and to taking repossession action only as a last resort. The forecast for 2014 as a whole suggest repossessions will be on a similar level to 2013.”

Elsewhere Precise and Nemo have reduced their headline rates in the last month, with the latter now offering a rate of 5.784%.

The Cardiff-based lender has also reduced the minimum loan amount from £40k to £30k on their lowest cost B1 product.

Automated valuations continue to be used on lower LTV lending and Nemo have negotiated a reduction in cost for brokers placing business through them from £35 to £21 plus VAT.

Prestige Finance announced the biggest change, reducing its headline rate from 6.75% to just 5.6% on loans from £10k to £100k with a maximum LTV of 65%.

At the other end of the scale, the near prime lender TFS made several changes to its product offering, lowering rates across the range, whilst continuing to accept equitable charges when the first charge lender declines consent. It has has also amended its income policy by reducing the minimum time employed to 3 months on all plans and lowered the minimum income to £10,000.

Criteria changes announced last month by Spring Finance, as a result of the recent completion of a new £100,000,000 bank funding license, have also been evident in the last month, with the completion of their largest and smallest ever loans (£80,000 & £5,000 respectively) whilst Blemain had similar news completing their largest ever secured loan of £615,000.


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