Secured Loans and the Recent Credit Crunch

The recent credit crunch has had a major effect on the secured loan market. Several Lenders have pulled out and many have tightened their criteria, which means that it is now more difficult to get a secured loan, especially If you are looking to Self certify and have no proof of income.

There are several reasons for this, as has been widely reported, the American Market has had major problems with the sub-prime market. This has led to many banks and institutions having to foreclose on loans made over the last few years. One of the culprits, it would seem , is the self cert market, with several authorities suggesting that the loans made, were made without proper checks on income and affordability. this has led to high levels of debts and arrears and ultimately foreclosures on an unprecedented level.

The American credit crisis has had a knock on effect in the UK, with several banks/ lenders within the secured market either closing their doors or tightening their criteria. This is due to the fact that several lenders have been backed by american / foreign investment companies.For the self employed / self cert market the situation is worse, because their are now only a few lenders that offer secured loans to the self cert market and generally only upto 75% loan to value ( LTV ). There are lenders that will lend to higher LTV but the criteria can be quite restrictive.

The UK secured loans market is going through a transition, with changes occurring almost daily, opinions are divided as to the possible outcome, but general consensus is that the sector will ride the storm and over the next few months the market will stabilize, and once the confidence has come back into the market, we should see a relaxing of the criteria and possibly new lenders entering the market.

Alan Reed writes for the following websites, http://www.chrysalisfinance.co.uk, http://www.e-securedloans4you.co.uk