Smart Loans

Unsecured loans to become more available

25th November 2010

Research into the credit sector conducted by the Bank of England is suggesting that there is going to be more unsecured personal loans available in the concluding three months of this year.

The latest findings have been established by the Credit Conditions Survey, a quarterly analysis of what the credit sector is like in the eyes of lenders. The statistics are based on what the past three months have been like from the perspective of creditors, and what their analysis predicts for the quarter ahead. Because of how the Bank of England have said monetary stability and consumer confidence are priorities during the recovery, this investigation allows an insight into the trends of unsecured lending.

When consumers are looking for unsecured personal loans on the Internet, statistics show that the number of options available hasn’t fluctuated too drastically between April and September – meaning that the second and third quarters were relatively consistent. However, there are suggestions that the conclusion of 2010 is going to buck the trend, particularly as Christmas draws near.

In some ways, this isn’t just reflecting the demand that consumers have for unsecured personal loans in the winter, but a symbol of the confidence that lenders are starting to get with the services they provide. Fresh from the recession, many companies were wary of how offering loans recklessly could lose them money, and so restricted the products that they had on offer. Now though, there is a renewed determination to increase the availability of credit – which the Government also believe is important to encourage growth in business and in spending, as well as preventing a double-dip recession.

Even though some consumers might be willing to flood to unsecured personal loan websites to make their applications, there are still modest reminders that credit referencing agencies still play a key role in the acceptance process, and tough criteria remains. One expert had this to say: “Borrowers should be cautious about any future borrowing, making sure they can repay what they borrow. In particular, they should consider how they would manage with a change in circumstances that impacts on their financial position.”

Unemployment is still a real threat for many people, and the true wrath of the budget cuts aren’t expected for another couple of months, with the Chancellor going into detail about the sectors which will be affected later in October. Remembering that the economy is still volatile and that circumstances could change is worthwhile, and the last thing you want to do is to make your finances more complicated just because unsecured personal loans have become more available.

Could this be a green shoot for recovery? Possibly so. However, both the Bank of England and lenders are hesitant to predict trends in unsecured personal loans and the rest of the credit sector any further than the next quarter. Because of how circumstances are constantly changing, there is no certainty about the trends that are going to appear next.