Abstract
This report examines the UK market for secured lending products, comprising both further advances and secured or homeowner loans.
Secured loans, viewed by many as the poor cousin of unsecured loans and credit cards, have nevertheless made significant gains during the past few years. These gains, driven by rising housing equity, low interest rates and high levels of consumer spending, have, in turn, fuelled a burgeoning demand for debt consolidation products.
While market conditions improved during 2006, the acceleration of the US sub-prime crisis has created supply problems in global financial markets and this has affected both the availability and uptake of credit. Lenders have already begun to tighten lending criteria; the very structure of the market is being affected as lenders withdraw, and the number of small business failures (primarily among brokers) continues.
Indications are that secured loans are set to become more important as a product sector, with consumers continuing to seek viable solutions to their debt problems, and lenders introducing more flexible products that simultaneously meet regulatory requirements and provide a wider range of solutions.
This report examines the current state of play in the secured lending market, highlighting the impact of macro-economic and supply-side factors, as well as the changes in the consumer mindset that shape the market. Market size is assessed, and placed in the context of competitor products. Consumer research gives an insight into the mindset of the end user, and suggests new approaches that could take this oft-maligned product upmarket.
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