Secured loans suitable alternative in sluggish market

Posted 2007-10-14

Many lenders are expected to increase the amount of refusals given to applicants for unsecured credit and personal loans, observed Maya Imberg of Datamonitor Financial Services.

A cutback of lending conditions across the loans sector is not expected to last for long. However, for homeowners who are unable to obtain credit elsewhere, applying for a secured loan and using property as collateral could prove to be their best option in these uncertain times.

Data from Credit Action shows that the number of secured loans on properties increased by 10.8% in 2007 by the end of August, while unsecured lending continued to fall.

Conditions are expected to become more favourable in the future. As Ms. Imberg explained, “The US sub-prime mortgage crisis and global credit crunch will affect the market in the short-term, with the market dipping in 2007 before seeing a slow recovery.”

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