More Banks Will Withdraw Loan Products, Expert Says

Thu, 17 Jul 2008

Following the decision by Barclays to withdraw its First Plus loans unit, experts are warning consumers that there will be an increasing number of lenders withdrawing from the market in the coming weeks and months. With Barclays announcing the withdrawal of its First Plus and Fair and Square loans, borrowers have seen their choice of loan providers limited further. Alliance and Leicester, Breeze Loans, Capital One, Money Partners and Picture Financial are among the lenders to have already withdrawn their products from the market, as getting a loan becomes increasingly difficult.

Moneyfacts analyst Michelle Slade revealed her prediction that the loan market will continue to contract in the near future. She said, ‘Unfortunately, many lenders are no longer finding secured loans a viable business option. They face the same funding issues as mortgage lenders and with house prices continuing to fall, lenders can no longer be sure that, if a consumer defaults on their loan, they will have enough equity in their home to repay the debt .’

Banks remain constricted by the credit crisis, whilst their caution has been added to by worries that borrowers will be unable to meet repayments due to the higher food, energy and fuel bills they face.
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