Seconds market pauses for breath in May
May lending remained 12% higher than a year ago but as Enterprise highlighted, the post-election boom has yet to significantly materialise in the seconds industry.
Secured lending has now breached the £800m barrier, as there were £818m of completions in the 12 months to May, an 18% increase year-on-year.
Harry, director of Enterprise Finance, said: “The spike in secured loan activity in March was always going to be a hard act to follow and subsequently we saw a slight calming in April and May as pre-election uncertainty took hold.
“With the benefit of hindsight and knowing how conclusive the eventual result was, it can be difficult to remember how unsure people were back in spring.
“Despite the dip, we are still comfortably above the levels experienced a year ago and significantly higher than the longer-term average.
“Sustained growth in any industry is often interspersed with slight corrections or plateaus and the slight dip in May is unlikely to point to a wider malaise.”
The average seconds loan size has now decreased to £59,358 behind a typical first charge of £254,634.
Average loan-to-value ratios currently stand at 61% having dipped to 56% in March, something Enterprise said marks a return to the normality.
Landy added: “Consumer confidence in the UK continues to improve and reached a 15-year high in June, but this buoyancy hasn’t yet translated into heightened demand for secured loans.
“It could well be that May’s figures came too early to register the post-election relief and this improved sentiment may be more noticeable when we have figures for the summer to hand.
“Looking at how other economic variables have fared since the nation went to the polls, it is only really house prices that have experienced a noticeable spike and mortgage lending remains relatively muted.
“However, with a number of forward indicators of lending suggesting improvements in coming months and low inflation, falling unemployment and improving wages combining to lighten the mood, we would expect the secured lending market to follow suit over the coming months.”