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2008-05-02 04:37:40
How Has the Global Credit Crunch Affected the UK Secured Loans Market?
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 If you watch TV or read the papers at all then you know all about the global credit crunch that has played out over the past year or so.
The credit crunch started with the subprime mortgage market in the United States, and slowly worked its way to other economic giants, including the United Kingdom.
The big question is - how has this "credit crunch" affected the market for secured loans in the United Kingdom?
1. Reduction in Loan to Value %. In the past, most UK homeowners were able to borrow up to 125% of the total value of their homes, after subtracting outstanding mortgages and loans. This means that if your home was appraised at 200k pounds and you had 100k in outstanding mortgages left on the property, you would be able to borrow up to 125k pounds for a secured loan.
Things have changed and banks have tightened their lending criteria. Most secured loans are 100% LTV now, which means that you are only able to borrow up to 100% of the total equity in your home.
2. Tightened lending requirements. Many banks have increased the amount of income that a household must be earning, regardless of whether or not the applicants own a home. If you own a home and are employed full-time, then you likely still easily qualify. But for people who may be semi-retired and not earning a full income, they may find themselves on the outside looking in when it comes to finding a secured loan.
3. Less competition. Quite a few companies have closed up shop in the past few months. This means less competition, which means less places that you will be able to obtain a loan.
4. Interest rates. With the global credit crunch that is currently taking place, interest rates have been fluctuating wildly throughout the world. You may want to consider a fixed rate homeowner loan instead of a variable loan.
That's the bad news.
The good news is that the market will improve. The good news is that this is simply part of a cycle, and this current downswing is working some of the excess out of the markets.
If you need a secured loan, there are still many places that will be happy to lend you money. Secured loans carry considerably less risk than an unsecured loan, so many banks and lenders are still eager to lend money to homeowners.
If you have applied and been turned down, don't despair - there are still hundreds of secured loan companies in the UK that are still open for business. Try somewhere else.
Apply for a Lending Place secured loan today!
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