Economic thaw starts secured loans rate war
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Secured loan lenders have em-barked on a rate war as the sector starts to see signs of recovery.
Dave Pinnington, business deve-lopment director at V Loans, says lenders are competing again, raising LTVs and reducing rates.
The average APR for a secured loan has fallen to around 11%, compared with a peak of 17% a few years ago.
Nemo hiked its LTV to 85% in May and one anonymous lender is offering a 90% LTV deal via packa-ger Secured Loans Consulting.
Pinnington says: “There’s a mini rate war going on between lenders. More firms are entering the sector and existing ones are lowering rates and increasing LTVs.
“After two years of negative criteria changes, the recent moves are a boost for the sector. So mortgage brokers can revisit clients they may not have been able to help a couple of years ago.”
Rob Derry, managing director of Brunel Mortgages & Loans, says that the secured loan market could fill the void for those who are unable to remortgage.
He says: “If remortgage appli-cants are self-employed or have a bit of adverse credit in the last two years, their choices are limited.
“Secured loans offer options to more customers and if borrowers want to consolidate their secured loan and mortgage in the future there are no early repayment char-ges on the secured loan.”
David Johnson, chief executive of Link Loans, says that after a period of severe supply constraint the market has started to improve.
He says: “Demand is set to build as structural changes in the market bite and consumers continue their shift to home improvements as house moves remain subdued.
“When combined with the remortgage potential that exists with the current level of credit card and unsecured lending, the oppor-tunity for brokers is once again starting to look appealing.”
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