As the recession continues to bite, brokers and lenders in the secured loan market appear to be hanging on for dear life, but as one person put it to me last week: “It just takes one to make a move and the rest will follow.”
He was speaking about new lenders launching into the market and why it is only a matter of time before more secured lenders enter the market.
Off course, the greatest intentions in the world are no good without actual funding- which is sadly lacking at the moment.
But for once when the funding does return it will be the secured loan market that could be the first to feel the benefit of the cash injections.
New lenders are only going to be able to borrow so much money and they can get a lot more for their money by launching into the secured loan market than they can the mortgage market.
New lenders will be able to do twice as much business in the secured market as they would the mortgage because of the smaller loan size.
The question is, can brokers and lenders stick it out long enough and still maintain a presence in the secured loan market until new funding comes along.
There are an increasing number of forces at work that are
trying to prevent the survival of the secured loan market.
The ban of SPPI and PPI at point of sale will not help, and neither will the growing number of lenders that keep withdrawing from the market or making it harder to make profit.
However while demand still exists, which it does more than ever, there will always be a reason why the market can survive and sit out the storm.