UK secured loan market set to hit £10bn
Thursday, 18 Oct 2007
The UK personal secured loan market is set to rise from £7.5 billion worth of loans advanced in 2006 to £10.2 billion by 2011.
A new Datamonitor report predicts the growth in demand for loans secured against a borrower's property to reach five per cent a year over the coming four years.
More secured loans are predicted to be taken out as demand for products to consolidate debts grows along with levels of unsecured debts.
Growth is expected despite some lenders pulling out of the market in the fall-out of the US sub-prime crisis and the following credit crunch – which has made it more difficult for lenders to access finance on the money markets.
So far this year Kensington Personal Loans - which entered the secured loans market in 2006 - has stepped out of the market temporarily and GMAC-RFC has abandoned plans to go into secured loans.
Lehman Brothers has also closed secured loan providers the London Mortgage Company and Southern Pacific Personal.
"The US sub-prime mortgage crisis and global credit crunch will affect the market in the short term. However the UK secured personal loans market continues to portray an encouraging future in the long term," said Maya Imberg, analyst with Datamonitor's Financial Services practice.
Consumers, however, will find the cost of secured loans rising as lenders look less likely to take on risks and tightening lending criteria will mean it will be harder to secure a deal.
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