First Direct swamped with loan applications

I wrote about the Bank of England stats on secured loans the other day. Well there is more to that story, it turns out.

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.