Secured loan providers disappear, says Moneyfacts

Wed, 20 May 2009

A new survey of the market has shown that 14 major providers of secured personal loans have ceased offering the service since mid-2007.

Alliance and Leicester, Barclays, Capital One Bank and Paragon Personal Finance are among the institutions to disappear from the secured loans market.

According to Moneyfacts, this is due to falling house prices negatively affecting the amount of equity available to those who usually apply for secured loans, which are guaranteed through assets such as homes .

However, there is still a demand for the service, especially during the recession .

Michelle Slade, analyst at Moneyfacts, said: "Many lenders have found it is no longer a viable business option to offer secured loans in the current economic climate and we have to wonder for how long the remaining lenders will be able to survive."

Moneyfacts recently said that those looking to borrow sums of £5,000 in the form of a personal loan have been hit hardest by lenders' increasing interest rates, with average rates 44 per cent higher than two years ago.
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