Action needs to be taken at a macro level to bring more liquidity into the market and it seems like the government are starting to take a more proactive interest in resolving the issue.
This in turn should ultimately help existing and new lenders to get involved in the opportunities that exist in the secured loan sector.
As I write this column, Prime Minister Gordon Brown is at last meeting leading City figures in Downing Street amid rising concerns over the global economic crisis. They are expected to discuss the credit crunch and its effect on the UK.
The meeting, which includes heads of major lending banks, comes a day after Mr Brown insisted keeping the economy on track was his “sole focus”. So let’s hope that there is a light at the end of the tunnel.
The secured loan market has helped thousands of people restructure their debt and start to make financial plans that will serve them well into the future. The problem now, unfortunately, is that lenders in this market are pulling back from the front line at a time when they should be looking to get more involved and blaming a lack of funds or an inability to cope with existing demand.
Intermediaries and trade bodies are courting new lenders for this market and hopefully it will be possible to attract new capital into the sector. Whether this comes from traditional market lenders who have chosen to take a back seat at the moment, lenders in the UK who have not been part of this market in the past or overseas lenders looking for new opportunities remains to be seen.
The fact of the matter is that the secured loan market offers excellent opportunities and those that avail themselves of them in the proper manner are likely to do well.
Like other parts of the UK lending industry, the secured loan market has become increasingly professional. The creation of the Association of Finance Brokers has helped intermediaries in this market lobby for improvements and helped set a benchmark by which all brokers in this market must judge themselves.
The association is also in the process of formulating market data, which will be very useful in establishing a true picture of the market on an ongoing basis. This will be of real value to everyone currently involved in the sector as well as helping those considering a move into it.
Despite the dramatic change in the financial environment, there has been little change in the needs of borrowers and the potential that lending in the secured loan market offers.
However, we should fully expect to see changes in the distribution models as brokers and lenders realign their businesses to reflect the current availability of products, conversion rates and income.