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Secured loans sales show steady growth

Borrowers are increasingly taking out secured loans as an alternative to remortgaging, sales figures have revealed.

Dev Malle, associate director of sales at Pink Home Loans, said its secured loan business had risen by 71% in the three months until the end of October, when compared to the previous quarter.

He believed the increase was a result of changes to rules earlier this year, which have resulted in a new formula for calculating redemption charges, as well as a growing acceptance among intermediaries. He said: "Month on month, secured loan business has been going up. For short-term lending, as long as it is done sensibly, people are seeing it as a real option."

Malle said Pink's appointed representatives were more aware of secured loans and were increasingly using them in the right circumstances. He said: "As long as advisers follow a consistent, robust sales process and treat it almost as regulated, even though it is not, I think there is a real place in the market for secured loans."

Marie Kennedy, national sales manager at Southern Pacific Personal Loans, said the growth of the secured personal loans market could be attributed to a sustained period of low interest rates, low unemployment and the increase in house prices. She said: "However, the 12 months following Mortgage Day has seen aggressive marketing of the broker market, where the issue of best advice is now forcing mortgage brokers to look at alternative options for their clients.

"The changes to the charging of redemption penalties for regulated loans has also made this much more transparent for borrowers.

"Secured loans present an option of short-term finance for potential loan customers, where previously the only alternative would have been to remortgage – an expensive option where redemption penalties are incurred or total borrowing is remortgaged onto a higher rate of interest."

David Wylie, managing director of C2 financial, said the branded lender's recent regional workshops had helped to educate brokers on secured loans. He said: "As a result of those roadshows, we have seen a significant increase in volumes.

Source: Mortgage Solutions Magazine

 

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