Latest Debt News
Secured loan market taking a downward turn
14/07/2008 17:08:00
Consumers' ability to gain secured loans in the foreseeable future has been questioned by a financial expert.
Responding to news that First Plus, a unit of Barclays Bank, is due to stop applications for secured loans from August onwards, the financial resource Moneyfacts.co.uk said the lender has become "the latest casualty of the credit crunch".
The study shows the secured loan market is reacting in a similar way as the mortgage market is to the economic downturn, in that both types of lender rely on the release of equity on customers' homes to cover any losses if the borrower defaults on payment.
Hence, with property prices declining and the possibility of repossession for many people, lenders can no longer count on "recouping the debt owed to them".
A spokesperson for Moneyfacts.co.uk said: "If the credit crunch can cause one of the biggest lenders in secured loans to throw in the towel, it will be interesting to see if the other providers can weather the storm."
Barclays announced on July 8th that 300 jobs may be impacted by the development, Thomson Financial News reported.
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