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Availability of secured credit largely static in Q1

Availability of secured credit largely static in Q1

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Video transcript

The latest quarterly Credit Conditions Survey for the first three months of 2016 has been published by the Bank of England.

In it, the bank revealed that the availability of secured credit to households across the UK remained relatively stable during the three-month period. However, demand for products of this type did increase.

Lenders also revealed that they had expected an improvement in the availability of secured loans during the first quarter of the year, but this failed to happen. It marks a further tightening of lending criteria that could impact lending performance in the months ahead.

Overall, secured loan availability to borrowers with loan-to-value ratios below 75 per cent increased slightly during the first three months of the year, while availability to those exceeding 75 per cent LTV remained unchanged.

At the same time, the Bank of England report revealed that loan pricing during the first quarter saw an increase in spread, with the difference between the highest and lowest-cost deals rising during the three-month period.

This was seen as a widely unexpected phenomena; bringing to an end 13 consecutive quarters of decreasing spread. However, heading into Q2, the spread of costs is now predicted to grow wider.

However, demand for secured loans continues to rise across the country, with household purchase remaining the strongest driver of growth in the sector at present.

As part of this overall trend, both demand for prime lending and demand for buy-to-let lending increased during Q1.

Responding to the findings of the Bank of England report, chief operating officer of the government-backed British Business Bank Patrick Magee stated: `The bank market is beginning to recover and the credit appetite is coming back.`

He went on to add that the market for secured loans continues to grow, meaning lenders are able to draw upon increasing amounts of equity in the current economic and financial climate.

Finally, positive news relating to the volume of defaults on secured lending was also highlighted in the Bank of England`s report, with a reduction in default rates on secured loans to households during the first three months of the year.

Homeowner Secured Loans
Rates From 7.1% APRC Representative Example £30,000 over 72 months @ £679.90 repayments. Total payable of £49,949. 20.1% APRC including £2,975 intermediary fee and a £995 lender fee. Loans secured on property. First Choice are tied to certain loan providers.

Mortgages & Remortgages
4.5% APRC
Representative Example: Borrow £80,000 over 25 years At 4.6% Variable, £461.95 for 300 months.
Total Payable £138,585. Total Cost Of Credit £58,585 (incl £1360 fee).


Unsecured Personal Loans
REPRESENTATIVE 49.9% APR (VARIABLE)
First Choice are tied to certain unsecured lenders.


THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Security is required on immovable property.



Established In 1988. Company Registration Number 2316399. Authorised & Regulated By The Financial Conduct Authority (FCA). Firm Reference Number 302981. Mortgages & Homeowner Secured Loans Are Secured On Your Home

First Choice Finance is a trading style of First Choice Funding Limited of The Old Courtyard, 103 Buxton Road, High Lane, Stockport, Cheshire. SK6 8DX. Copyright protected 2014.


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