loan search for homeowners

Financial solution company thinkmoney.com has moved to reassure homeowners that, despite falls in the housing market, secured loans can still represent a sensible option for raising much-needed funds.

A spokesperson from the company commented, “As a second charge on a home, a secured loan involves a certain risk from a lender’s perspective, so secured lenders are keeping a very close eye on issues in the housing market. A recent Bank of England survey revealed that default rates on secured lending rose by more than expected in Quarter 2, and lenders expect these rates to rise further in the months ahead.

“Today’s falling prices are reducing the number of homeowners with enough equity to make a secured loan a viable solution – and deterring many who are keen to retain their ‘safety margin’ against negative equity.

“Having said that, it’s important to see recent falls in house prices in their correct context: as relatively small drops following a decade of rapid growth. According to Nationwide’s House Price Index, for example, the average house in Quarter 2 2008 was still worth almost £10,000 more than it was in Quarter 2 2006. In just ten years, Nationwide reports, the average house price rose from £60,754 to £184,131.

“Homeowners may be worried about falling prices, but many are still likely to own significant levels of equity. For them, a secured loan can be an excellent debt solution; a realistic way to consolidate their unsecured debts into one manageable, lower interest debt which they can arrange to repay at an affordable rate.”

However, the spokesperson did add that, for some homeowners, there may be better ways of raising money or consolidating debts and that all potential options should be both investigated and considered.