New Secured Loans Down By A Quarter On Last Year
We are all painfully aware of just how much new secured loan applications suffered over the course of last year following the impact of the effects of the credit crunch.
The major high street banks and building societies severely restricted their lending criteria, due to suffering problems with their own liquidity and it has become much harder for the average person in the street to be accepted for a new secured loan, particularly one at competitive rates.
The latest figures from the British Banking Association (BBA) should not really come as any surprise then. According to the BBA, although net new lending on secured loans rose in December by £2.9 billion, the total amount of new lending for the main high street banks fell by 23 per cent over the course of last year, compared with the previous years figures, from £221 billion during 2007, to only £170 billion throughout the whole of 2008.
It is not only secured loans and mortgages which have been affected by the slow down, other forms of consumer credit such as personal loans have also been hit in a similar way, with the total amount of new lending on personal loans falling by £400 million on the previous year.
David Dooks of the BBA said “The banks approved less than half the 2007 number of loans for house purchase, reflecting falling demand from households facing greater economic uncertainty and double digit falls in house prices over the year which led to a wait and see mentality.
Consumer credit was very weak in December as people reined in their credit card spending, despite early sales and heavy discounting by retailers. This consumer caution was also reflected in personal deposits, which rose strongly.”
