Last year, for instance, the bank reported British homeowners let go £14.6bn in the final quarter of 2006 using mortgage equity withdrawal. And in that year as a whole the number rose to a staggering £49.7bn.

The previous year that total figure withdrawn was only £36.6bn. That represented a rise of £13.1bn in the secured loan market.

These are big, strong numbers and they show the strength of this loan instrument and the resilience of the British borrower. That is to say, the secured loan is an efficient, effective method for quickly getting some essential short term borrowings. And people find them easy to used and easy to repay on time.

He noticed that falling house prices here in the UK are making people feel less wealthy and perhaps blunting their short-term optimism about the future.

Well, this is true. But for anyone with a reasonable amount of equity in their home, secured loans, the tried-and-tested method of using equity as a security for a quick loan will still work. Wonderfully!

This is because the fundamentals of this financing mechanism don’t change with shifts in the economy. If you’ve had your home for some years, and have been regularly paying off your loan, the price will have gathered some appreciation and your proportion of the value will have risen. A banker, even in dark times, is looking for a secure place to lend his shareholders’ money. And what is more sure for him than the tangible asset you live in — your home!

So if you get hit with one of those common family crises that come to most of us, like the need for a new car, or an addition to the house because the kids are growing up, then your application for a loan secured against your holding in your home will almost always be well received in the high street banks and by the non-banking lenders.

This is not a good record.

Add to that inflation in April hitting 3 percent, up from 2.5 percent in March.

This was the context for a near-unanimous decision by the Bank’s Monetary Policy Committee meeting earlier this month to hold interest rates at 5 percent. The 8-1 vote in favor of holding was not entirely anticipated by the markets. And the decision is thought to have lessened the likelihood of rate cuts in the near future.

It seems the committee felt a 0.25 percentage point reduction would make it that much more difficult to get inflation back to the target of 2 percent, even though it seems the economy is slowing.

So where does this leave those of us who would like to use a secured loan to get some urgently needed cash? It has always been wise to talk with a neutral broker when you are putting up your home against a loan. No matter how urgent the need for money, take the time to talk about the economy and the different terms and conditions different lenders will apply to these loans. A good broker will save you both time and money in the end.

Let me recap a little first, though.

The other day I pointed out that Bank of England official figures show something that we all instinctively feel — secured loans remain a popular financial instrument.

In the final quarter of last year, for instance, home owners here in the UK released around £14.6bn using mortgage equity withdrawal. And if that seems like a lot, just consider the total for the four quarters of that year. The total was an almost unbelievable £49.7bn.

This was up from the previous year’s total of just under £37bn. In other words, a rise of some £13bn in that section of the loan market.

As you think about these number you will appreciate the value of this kind of borrowing instrument. (And, of course, the strength of the British borrower!) A secured loan is a safe, effective way of securing a short term loan. One that more and more British people are finding easy to both get and repay on time.

This year’s numbers support the trend, and this is the next bit of news I wanted to comment on.

Take for instance the way that First Direct, a major UK lender, owned by the big international HSBC banking group, recently stopped taking any more mortgage applications.

They had such a large pile of loan applications their approval system had got clogged up! A spokesman has said this “drastic” step had been taken partly in response to changes other lenders had made. The market is always fluid, and those actions by other lenders had moved a tsunami of applications into First Direct offices. But the lender assured the public that the doors would again open for new borrowings, as soon as the back log had been cleared.

This shows the undiminished popularity of mortgages. And that, coupled with the Bank of England number for mortgage equity withdrawal, is good for high streets up and down Great Britain, where the borrowers spend those loans.

The family is managing OK on two incomes, although there is not a lot left over at the end of the month, and then the daughter announces the wonderful news that she’s going to be married — and they’ve set the date four months from now!

After a giddy round of happy parties, and the visits from streams of well wishers, mum and dad have to get down to the grim business of finding the money to pay for the wedding day.

They are not alone. Five million people, or one in 10 adults, spend more than they earn on a monthly basis, according to financial comparison web site Uswitch. And in addition, two in 10 adults don’t have any spare money left at the end of the month.

This is where a secured loan becomes attractive. Not only because a good bank, or a solid. non-traditional lender, will look favourably on a home owner who has equity in his property that can be stood up against the loan and let him borrow. But also because this can be negotiated quickly.

First, take up one of these loans from a position of strength.

Don’t take one if you have several other loans and a re almost struggling to make the repayments on them. Imagine what would happen if you added a secured loan to your borrowings and then found your income was affected in some way. You would have to either give up some of the other loans — which means returning the items you purchased earlier. Or have the pain of losing your home and having to buy another one, in another part of your city. Both are too disruptive to even contemplate! So take out a secured loan when you have no other major loans to repay and your income is steady and more or less assured.

Second, talk to more than one lender.

When you take your income and asset to a lender he will almost certainly offer you a loan. Because of the security you  ring to the negotiation. And if you take your request for a loan to more than one lender you will find they will all line up with competing offers! Suddenly you are in demand by lenders who ware looking for safe investments. (And a well secured loan on a good home is certainly a good investment from their perspective!) So apply this Golden Rule and go and find a broker to help you. Get on the Internet and find someone who will advise you and help you compare the various interest rates and terms you will be offered by the lenders.

What I’m talking about is that happy state where you are free of financial worry because you know you can pay any bill that comes through the mail, and that your standard of living is just about where you want it to be. You’re flying free financially. You’re able to save and have enough to meet an unexpected downturn either in the economy or your personal income. Your retirement plan is risk-free and the nest egg is getting bigger. (more…)

This is because if your circumstances unexpectedly change and you suddenly can’t keep up with your repayment schedule — even after the lender has made concessions and been generous with repayment ‘holidays’ — then you will hand over your agreed security and the lender will sell it to get back his loan money.

There is a rule of thumb that will always keep you away from this risk.

It is, simply, that a secured loan is best taken out when you are not under any debt pressure — if you have no other loans and receive a steady income. You can imagine how it would be if you were pressured by other debts. If you were only just managing to meet several existing repayments for other loans, took a secured loan, and suddenly saw your financial circumstances abruptly change. That would put you under a lot of pressure.

Since people are normally unhindered by a lot of loans, secured loans are an attractive, safe option for many of us. What you need to do to meet an unexpected expense is get on the Internet and find a reliable, approachable broker who can guide you into the best deal out there and make it easy for you to get your secured loan.

Although we Brits are not the world’s best savers (we are ahead of the US, but behind France, the Netherlands and Germany when measured for the percentage of consumers with no spare cash after pay day) we have been putting around £2.5 billion a month into savings accounts with the big high street banks. That changed late last year when a staggering £1.1 billion disappeared from that inflow. (more…)