Harry Landy, Sales Director of Enterprise Finance, said: “If household debt does grow at the rate forecast by the Arrow Global report, we could see a surge in secured lending over the next five years.
Consumers may turn to secured lending for support, as they seek to consolidate their various sources of personal debt. By obtaining a second-charge loan against assets like property, lenders will be able to offer lower interest rates compared to other forms of borrowing. This will make their monthly repayments much more affordable. The latest Enterprise Finance Secured Loan Index shows that debt consolidation is already one the most popular reasons to take out a second-charge loan and we would expect this to increase in future.
“The introduction of the EU’s Mortgage Credit Directive next month will ensure that secured lending remains responsible and borrowers are properly protected. This regulation will increase consumer confidence, as they will feel more confident turning to secured finance as a viable alternative to remortgaging. By providing help to those in need, the secured loan industry can help limit the future growth in home possessions.”
This comment first appeared in Loan Talk.