The total lent this year to date is £493,279,637 as secured lending sees its best December since 2007.
Total lending in December was £40,871,398 – up 66.5% on December 2012.
Matt Tristram, co-founder and director of Loans Warehouse and Clearly Loans, said: “The Secured Loan Index has been published since June 2012, yet this is the very first time I’ve been able to write about a statistic that has out performed 2007. Secured lending in December beat the total amount lent in the same month in 2008!”
And he added: “Whilst figures for December show a decrease of 12.71% from November, this is always to be expected at this time of year. But, a 66.5% increase on the previous year is an incredible rise.”
Q4 has been the biggest quarter the industry has seen since 2009 at £138,470,000, and December marks the 26th month of successive year-on-year growth.
Tristram added: “The FLA revealed last week that overall consumer finance new business grew by 6% 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 and most recently, Precise. Spring Finance has also rebranded as Watchtower.
Tristram said: “Lending figures have increased every single month in 2013 compared to the previous year. At the start of the year, there were certain months I personally thought would be hard to beat. However every single month we have reported increased lending figures on the previous year. Increases ranging from 15% (August) to 66.5% (December).”
Bigger loans, cheaper rates, higher LTVs? Throughout the year a rate war has resulted in all time low rates with the lowest rate currently standing at a proud 5.4%. And the loans available today are bigger than ever before; early in the year Prestige matched Blemain’s industry leading maximum loan of £500,000 but with a much lower lender fee. 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 but the thunder was stolen just a few weeks before when Prestige launched a new larger loan product up to £2,500,000.
The trend of new lenders looking at the secured loan market is sure to continue with the likes of United Trust Bank, Paragon and Aldermore rumored to be looking to release a secured loan range in 2014. New lenders are expected to emerge including Optimum Credit, fronted by several ex-Nemo Personal Finance directors.
Tristram added: “For me this will be the year that secured lending will make it’s mark on buy-to-let 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 buy-to-let specialist secured loan lender?
“We’re likely to see growth in Scotland as several lenders still have restricted lending, more lenders are likely to look at lending in Northern Ireland with just Clearly Loans and Evolution Money currently offering products across the water.”
It seems likely that as product continue to improve, so will demand. Lenders and brokers alike will invest heavily this year and compete on who will have the most user friendly systems. It’s not just about the best rate, the customer journey will become more considered after April 2014.
Michael Coogan, strategic adviser at Loans Warehouse, 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.”