Secured lending rises yet again

February 2014 is the 28th consecutive month of year-on-year growth in secured lending.

Although the rise monthly is just 0.12%, this is the healthiest February since 2009.

Matt Tristram, co-founder and director of Loans Warehouse and Clearly Loans, said: “After just two months of 2014 we are already seeing figures to challenge those lent in the whole of Q1 2013; in fact you have to go back as far as 2009 to find a better February.”

But he added: “There was one negative last month for secured lending; the disappointing news that one of 2013’s new entrants, Firmus Secured Loans, had put a hold on all lending for three months and made staff at the London based office redundant.”

This came as a bit of a shock, Tristram went on to say, adding that despite being the original broker involved in the launch of Firmus, Loans Warehouse had heard very little officially.

He said: “The abrupt halt in funding does not suggest a quick return for the lender launched last September.”

It is less than a month until the hand over of second charge regulation from OFT to FCA.

And Tristram added: “The industry is a hive of activity in preparation, many lenders and brokers having held meetings and seminars together to ensure the industry is working towards a common goal.

“Whilst very little is likely to alter day one, this is a huge change for an industry previously only regulated at arms length by the OFT. I believe the change will be welcomed with open arms as it will take secured lending to the next level with the increased recognition that comes from FCA regulation.

“At this point, it’s no real surprise that lenders aren’t making too many alterations. There have been tweaks, for example, Prestige made a minor change to their valuation criteria by announcing they will now accept drive-by valuations on gross loans up to £100k, with a maximum LTV of 70%.

“The recovery of secured lending in Northern Ireland continues with TFS and 1st Stop Homeloans becoming the fourth and fifth lenders to launch a product a range in the last couple of months”

Tristram said that one stand out bit of news in the last few weeks was that Hertfordshire-based lender Spring Finance had secured a £100m bank funding line.

“Spring may not be known to those outside the secured loan industry despite trading since 2003. It stopped lending in 2008 just prior to the credit crunch and then restarted in 2011. They launched again with a forward thinking FCA regulated structure, lending to clients with heavy adverse credit but a strict income calculation to ensure ongoing affordability, aimed at long term stability.

“The new funding has already seen changes to criteria with an increase in the maximum loan from £50,000 to £100,000 whilst reducing the minimum loan size from £10,000 to £5,000.

“The company’s CEO Stuart Epstein told me: “We are delighted to have completed the substantial bank funding loan. This demonstrates the strength of the business and also gives us an excellent platform to increase our lending capability within the market."”