Principality Sees High Arrears On Loans
If someone were to ask which lender had the highest level of arrears on its loan book, most people would probably say the Northern Rock and although that would be a reasonable assumption, they would be wrong.
The Principality building society has just issued figures which show that 8.79 per cent of the total secured loan book, by value, was in arrears by the end of June this year. This is in excess of three times the loan arrears level for Northern Rock and is largely due to the societies second charge secured loan company, Nemo Personal Finance.
Nemo Personal Finance offered secured loans to borrowers at high loan to value levels, in some cases up to 100 per cent loan to value, prior to the credit crunch and although many of its competitors withdrew from the secured loan second charge market a long time ago, Nemo have continued offering secured loans to customers with a clean credit history, although their products have been re priced since the ban on the sale of Payment Protection Insurance (PPI) at the same time as a loan.
As a result of this, the company has posted a loss of £14.5 million to the end of last year, on its secured loan business.
Peter Griffiths of the Principality reassured customers that whilst the figures looked bad, they were still better than many secured loan companies and the situation would recover in time, he said “We have built a book which is performing. It had a very difficult year last year, but that is no surprise. We have worked closely with customers experiencing payment difficulties as repossession is very much a last resort. We are about 93 per cent funded by retail savers. In the future, the market will reopen and people will be looking for these types of products.”
