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Secured Loans - UK - February 2016

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

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