It is still only March and we have already had three of the biggest months in terms of change for the secured loan market.
First we had Nemo Personal Finance reduce its rates to an all-time low of 5.7 per cent, Shawbrook Bank increased its LTVs to 95 per cent and then Equifinance went one better with the release of a 100 per cent LTV product.
But the biggest change of 2013 so far for me was the launch of a ground breaking range of products from Prestige Finance, now a wholly-owned subsidiary of OneSavings Bank.
As we have seen with Shawbrook Bank, a banking license can only mean good things for the lending market and consumers alike and we were not to be disappointed with Prestige.
It is important to point out that this is not a return to the market for Prestige which has still been in the market.
But it is also difficult to compare the old products Prestige offered with the new ones it has launched under the umbrella of OneSavings Bank.
Because what the well-established lender has now produced is a new range in a different lending space.
Gone are the days of heavy adverse and the most restricted LTV limit in the market.
Now Prestige is offering some of the lowest rates in the market – with a headline rate of just 6.75 per cent only Nemo can currently boast a cheaper product.
The product range is simple with just six plans and far fewer LTV bands than its main competitors Nemo and Shawbrook. But the loan size is more restricted than the aforementioned lenders with loans from £5,000 to just £75,000, where as Nemo and Shawbrook both lend up to £200,000.
A minimum credit score has been introduced with the first five plans but there is still a 70 per cent LTV product with no minimum score that accepts mild adverse.
Comparing the new range with those of their main rivals, there are some areas where Prestige’s headline rate is cheaper on paper than the market leading Nemo.
Between 55 per cent and 70 per cent LTV Prestige leads the way with its rate, but remember that in line with both Nemo and Shawbrook only a minimum credit score of 450 will ensure only the consumers with the highest credit rating qualify.
Satisfied County Court Judgements and defaults over 12 months old can big ignored as can any adverse credit over 24 months old.
Nemo and Shawbrook Bank have led the way in the last 18 months, only really being challenged by each other. A new player in this space brings increased competition which can only be good news for the consumer.
The benefit that this increased competition demonstrates doesn’t end there, which brings me on to my final thought for this month’s Secured Loan Watch – the gap that is growing in the secured market.
It is clear for all to see the difference to a lender’s cost of funds that a banking license can make, but at the same time it does seem to affect the risk a lender is prepared to take.
The gap between the bank-owned lenders and even those whose funding comes from the high street is increasing.
This should lead to those lenders without a banking license having to become more diverse.
Will we see an increase in the number of lenders looking to lend on buy-to-let properties in the coming months? Higher LTVs? Possibly even the introduction of loans on shared-ownership properties? All of which will mean the secured loan market will continue to stay ahead of alternative lending streams throughout 2013.