There’s undoubtedly a lot of noise around secured loans at the moment with reports of record volumes since 2009 and certainly a significant increase since 2012.
However, I am far from sure that such headlines accurately portray what’s going on. According to industry figures, the average secured loan volumes for the period August 2012 to November 2012 were around £33m lending a month.
This pattern continued for the first three months of 2013 and the published figure for April is £41.7m worth of secured loan lending.
I have no doubt that those figures will increase when published for May, June and July. However, does that mean the secured loan sector is much busier are there other factors at play?
Those close to the industry will recall that, at the start of 2013, lenders, such as Nemo, Shawbrooke, Blemain, and latterly Prestige, significantly increased their appetites to write larger loans and a jump from, say, a £100,000 maximum to £200,000 can significantly alter the averages.
We have been comparing the last half of 2012 to the second quarter of 2013, we have seen the average loan amount increase by 47 per cent.
If this pattern has been repeated across the entire industry, and I see no reason why it shouldn’t have been, then without writing a single extra secured loan unit the secured loan market volume would have increased to £48m.
This suggests to me that as an industry we are not writing significantly more business. We are completing larger loans.
I don’t see this is bad news. This simply backs up my own theory that a high percentage of mortgage brokers are still yet to get their heads around secured loans and tap into the obvious income stream available to them.
We are teaching brokers how to market secured loans as an integrated part of their business.
Without doubt, the best is yet to come and I can predict secured loan volumes easily doubling or trebling solely as a result of more mortgage brokers getting to grips with secured lending, especially as regulation steers them in this direction.
Mortgage brokers who are not actively advertising and selling secured loans could be missing a multitude of tricks.
Certainly promoting secured loans along side mortgages will bring in more remortgage enquiries.
After all, people don’t want a remortgage they want money. For an extra £10,000 to £20,000 a potential borrower’s first thoughts are probably to look for a loan and the second thought is to go online. Brokers should make their clients aware they can offer loans and avoid losing potential business to the online aggregators.
After all a £15,000 loan enquiry is a fantastic opportunity to sell a remortgage as part of an overall review. If not there is still a good income to be had from the secured loan.
Let us not forget the potentially bigger opportunity which is to convert remortgage declines to a secured loan or even to unsecured, bridging, sub-prime business finance etc.
We talk to brokers every day who admit they have been thinking about getting around cracking secured loans and are effectively “binning” enquiries we can convert. As a master broker, the range of secured loans options is the best we have seen for six years and thousands of mortgage brokers are on the cusp of getting involved. I think we are only scratching the surface of secured loans and that’s pretty exciting.