As we reach halfway through the second UK lockdown and with Christmas approaching, many households will be reviewing their finances to make sure they are in a good state for the new year. This review may include consolidating debt to reduce the overall cost of interest and the monthly costs of finance payments. One of the most common forms of debt consolidation is a secured loan, with 61% of these in October for the purposes of debt consolidation according to insight from Loans Warehouse. A secured loan does use the borrower’s property as security for the lender for the loan, which means the borrower’s property is at risk if they fail to make their loan repayments.
Those wanting to consolidate their existing debts using a secured loan will find that lenders and the availability of secured loans is in good shape right now. Insight from Moneyfacts.co.uk’s preferred secured loans broker, Loans Warehouse, has reported stability in the secured lending market, with no significant changes or restrictions in criteria for those needing a secured loan during the second lockdown.
During the first lockdown that started in March 2020, secured lending figures dropped by 80% as a result of not being able to conduct physical valuations on properties and as lenders adjusted to home working operations. The current lockdown is different, as there is no restriction on valuations taking place in person and lenders are using desktop valuation tools where possible instead.
The Finance and Leasing Association (FLA), the trade body representing the secured lending market, reported continued growth of secured loans in September, with the highest level of new business this year since March.
Fiona Hoyle, head of consumer & mortgage finance at the FLA, said: “The second charge mortgage market continued to recover in September, recording its highest monthly level of new business since March this year. As the UK enters a new phase of lockdown restrictions, lenders are continuing to do all they can to support customers during this challenging period. If customers are experiencing payment difficulties, we urge them to contact their lender as soon as possible.”
Despite lenders returning to the market after the first lockdown, the gap that resulted from the Spring lockdown has not been recovered, with the total number of secured loans completed still 40% behind the same period last year. There are positive signs though, as Loans Warehouse reports that in October lending volumes saw growth, with 31% more loans completing compared to September.