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Secured Loans - UK - February 2016

“Secured loans are experiencing a revival, following a dramatic decline in sales a few years ago due to the impact of the financial crisis. The market faces regulatory overhaul in 2016, which will bring greater attention to secured loans and change the way these products are viewed by both brokers and consumers. It may finally be time for the market to move away from being seen as a last resort lending product.”
– Jessica Galletley, Financial Services Analyst

This report discusses the following key topics:

  • Moving beyond a product of last resort
  • Consumer education is key to growth
  • Broker proactivity will unlock potential borrowers

Increasing consumer confidence and demand for credit has driven lending, whilst changing consumer attitudes and product innovation has opened up secured loans to a wider range of potential borrowers. Strong growth is forecasted for the next five years, with Mintel expecting the market to more than double in size by 2020.

Secured loans are still viewed by many as a last resort option, with consumers preferring unsecured forms of credit that pose less of a risk to their home. A lack of consumer awareness of how secured loans work and when they could be a better solution than other forms of borrowing also presents a challenge. However, with the Mortgage Credit Directive (MCD) set to align first and second charge mortgages from March 2016, the way both brokers and consumers view secured loans is set to change.

This report examines the performance of the secured loans market. It identifies key market drivers and competitor activity in terms of product and service innovation. It also explores consumer ownership of and attitudes towards secured loans, along with potential reasons for use and use of sources when seeking information about loans secured on a property.

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Table of contents

  1. Overview

    • What you need to know
    • Executive Summary

        • The market
          • 24% growth in 2015
            • Figure 1: Forecast of secured loans market by gross advances 2011-20
          • Existing mortgage providers are first port of call for borrowers
            • Figure 2: Sources of information used/likely to be used to find information on secured loans, October 2015
          • Key players
            • Number of lenders has grown over recent years
              • MCD drives product innovation
                • The consumer
                  • 3% of people have a secured loan
                    • Figure 3: Loan and credit product ownership, October 2015
                  • Nearly two thirds of homeowners would not consider a secured loan
                    • Figure 4: Secured loan usage and consideration, October 2015
                  • Consumers most likely to consider a loan for home improvements
                    • Figure 5: Factors influencing choice of secured loan provider
                  • Three quarters do not want to put their home at risk
                    • Consumers struggle to find relevance in secured loans
                      • Figure 6: Attitudes towards secured loans, October 2015
                    • What we think
                    • Issues and Insights

                      • Moving beyond a product of last resort
                        • The facts
                          • The implications
                            • Consumer education is key to growth
                              • The facts
                                • The implications
                                  • Broker proactivity will unlock potential borrowers
                                    • The facts
                                      • The implications
                                      • The Market – What You Need to Know

                                        • Strong market growth forecast
                                          • Consumers would go to their mortgage provider
                                            • Tightened credit conditions lead people to alternative forms of credit
                                              • Market success relies on broker acceptance
                                              • Market Size and Forecast

                                                • 24% growth expected in 2015
                                                  • Figure 7: Value of secured loans, by gross advances, 2011-15
                                                • Significant growth expected over the next few years
                                                  • Figure 8: Forecast of secured loans market, gross advances, 2010-20
                                                  • Figure 9: Value of secured loans forecast, 2010-20
                                                • Forecast methodology
                                                • Channels to Market

                                                  • Distribution structure has evolved
                                                    • Figure 10: Possible channels to purchase for secured loans
                                                  • Consumers would go to their mortgage provider
                                                    • Over half would use online sources
                                                      • Figure 11: Sources of information used/likely to be used to find information on secured loans, October 2015
                                                    • Market success relies on broker acceptance
                                                    • Market Drivers

                                                      • Secured lending faces regulatory overhaul
                                                        • Tightened credit conditions lead people to alternative forms of credit
                                                          • Secured loan rates reach record lows
                                                            • Market confidence has driven an increase in funding
                                                              • Rising property prices make it appealing to take out a secured loan
                                                                • Consumer confidence is increasing
                                                                  • Figure 12: Financial confidence, January 2009-October 2015
                                                              • Key Players – What You Need to Know

                                                                • Changing landscape for secured lending
                                                                  • Less than half of lenders offer direct purchases
                                                                    • The rise of prime borrowing
                                                                      • Buy-to-let secured loans
                                                                        • Lending into retirement
                                                                        • Key Players

                                                                          • Changing landscape for secured lending
                                                                            • Evolution Money
                                                                              • Overview
                                                                                • Secured loan product range
                                                                                  • Distribution channels
                                                                                    • Recent activity
                                                                                      • Masthaven Secured Loans
                                                                                        • Overview
                                                                                          • Secured loan product range
                                                                                            • Distribution channels
                                                                                              • Recent activity
                                                                                                • Precise Mortgages
                                                                                                  • Overview
                                                                                                    • Secured loan product range
                                                                                                      • Distribution channels
                                                                                                        • Recent activity
                                                                                                          • Prestige Finance
                                                                                                            • Overview
                                                                                                              • Secured loan product range
                                                                                                                • Distribution channels
                                                                                                                  • Recent activity
                                                                                                                    • Shawbrook Bank
                                                                                                                      • Overview
                                                                                                                        • Secured loan product range
                                                                                                                          • Distribution channels
                                                                                                                            • Recent activity
                                                                                                                            • Competitive Strategies

                                                                                                                              • Heightened period of innovation
                                                                                                                                • The rise of prime borrowing
                                                                                                                                  • Buy-to-let secured loans
                                                                                                                                    • Less than half of lenders offer direct purchases
                                                                                                                                      • Growing number of fixed rate products
                                                                                                                                        • Lending into retirement
                                                                                                                                          • Lenders reduce fees
                                                                                                                                            • Technology is key to good service
                                                                                                                                            • The Consumer – What You Need to Know

                                                                                                                                              • Ownership increases among those with multiple products
                                                                                                                                                • Two thirds would not consider a secured loan
                                                                                                                                                  • Secured loans used for investment purchases
                                                                                                                                                    • Interest rates and flexibility are a priority
                                                                                                                                                      • Secured loans seen as a last resort
                                                                                                                                                      • Loan and Credit Product Ownership

                                                                                                                                                        • Only 3% owe money on a secured loan
                                                                                                                                                          • Figure 13: Loan and credit product ownership, October 2015
                                                                                                                                                        • Ownership increases among those with multiple products
                                                                                                                                                          • Figure 14: Loan and credit product ownership, by repertoire of loan and credit products ownership, October 2015
                                                                                                                                                        • Secured loans outside the scope of borrowing needs
                                                                                                                                                          • Figure 15: Amount owed on credit products (excluding main mortgage), by credit products owned, October 2015
                                                                                                                                                      • Secured Loan Consideration

                                                                                                                                                        • Two thirds would not consider a secured loan
                                                                                                                                                            • Figure 16: Secured loan usage and consideration, October 2015
                                                                                                                                                          • Mortgage holders more likely to consider a secured loan
                                                                                                                                                            • Figure 17: Secured loan usage and consideration, by housing situation, October 2015
                                                                                                                                                          • Lenders need to do more to attract prime customers
                                                                                                                                                          • Reasons for Secured Loan Ownership

                                                                                                                                                            • Home improvements drive borrowing
                                                                                                                                                              • Other considerations split across key milestone purchases
                                                                                                                                                                • Figure 18: Reasons for taking out a secured loan, October 2015
                                                                                                                                                            • Factors Influencing Choice of Provider

                                                                                                                                                              • Interest rates are a priority
                                                                                                                                                                • Flexibility gives consumers an element of control
                                                                                                                                                                  • Borrowing from a reputable brand is less important
                                                                                                                                                                    • Online purchase is not a priority
                                                                                                                                                                        • Figure 19: Factors influencing choice of secured loan provider, October 2015
                                                                                                                                                                    • Attitudes towards Secured Loans

                                                                                                                                                                      • Three quarters do not want to put their home at risk
                                                                                                                                                                        • Women less likely to put their home at risk
                                                                                                                                                                          • Secured loans seen as a last resort
                                                                                                                                                                            • Secured lending seen as an option for borrowing larger amounts
                                                                                                                                                                              • A third don’t fully understand how secured loans work
                                                                                                                                                                                • Confusion over the cost of borrowing
                                                                                                                                                                                  • Figure 20: Attitudes towards secured loans, October 2015
                                                                                                                                                                              • Attitudes towards Borrowing

                                                                                                                                                                                • General dislike of being in debt
                                                                                                                                                                                  • Credit check concerns
                                                                                                                                                                                    • Combining credit could make it easier to manage
                                                                                                                                                                                      • Figure 21: Attitudes towards borrowing, October 2015
                                                                                                                                                                                    • High consideration among those looking to take out a loan
                                                                                                                                                                                      • Figure 22: Secured loan usage and consideration, by agreement with the statement ‘I am considering taking out a loan within the next 12 months’, October 2015
                                                                                                                                                                                  • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                                    • Products covered in this report
                                                                                                                                                                                      • Data sources
                                                                                                                                                                                        • Abbreviations
                                                                                                                                                                                          • Consumer research methodology
                                                                                                                                                                                          • Appendix – Market Size and Forecast

                                                                                                                                                                                              • Figure 23: Best- and worst-case scenario forecast – Value of secured loans, by gross advances, 2015-20
                                                                                                                                                                                            • Forecast methodology

                                                                                                                                                                                            Companies Covered

                                                                                                                                                                                            To learn more about the companies covered in this report please contact us.

                                                                                                                                                                                            Secured Loans - UK - February 2016

                                                                                                                                                                                            £1,995.00 (Excl.Tax)