Second charge loans 'close to disappearing'

20/05/2009

The secured loan sector has almost died out in the economic downturn-hit UK.

New figures out today from Moneyfacts.co.uk, a financial website, show that a total of 14 second charge lenders have stopped offering credit to consumers since 2007.

That year, the global credit crunch caused a tightening-up of loans markets in Britain - a situation which led to many lenders raising rates and even withdrawing products entirely.

The second charge secured loan market, which commonly sees homeowners take out an additional loan on their property apart from their mortgage, appears to have been particularly hard hit.

Three firms remain in the market: Nemo Personal Loans, Ocean Money and Secure Trust Bank.

Lenders who have withdrawn include high street giants such as Barclays and Alliance & Leicester, along with more specialised lenders Paragon and Picture Financial.

Michelle Slade, analyst at Moneyfacts.co.uk, commented: "Secured loans have tended to be the realm of those with smaller amounts of equity in their home or those with past credit problems.

"Falling house prices has resulted in borrowers no longer having enough equity in their property to be able to take advantage of such loans."

Second charge loans can prove risky for borrowers who can't meet their debts, as lenders retain the right to repossess homes.

Tags; Debt Management and Banking, Credit Card Lifestyle,

Regional Debt Advice; Debt Advice Leicester,

• Share
• 
• 
• Store
• 
• Follow
•