moneysupermarket.com: FLA's loan report

Commenting on the Finding and Lending Association's (FLA) report of a 45 per cent fall in unsecured loans over the last 12 months, Tim Moss, head of loans and debt at moneysupermarket.com, said; "The FLA seem to have reached the conclusion that the decrease in unsecured lending is down to a fall in consumer demand. However, this goes counter to our experience at moneysupermarket.com, where we have seen no abate in the number of people applying for unsecured loans.

"There appears to have been an initial 'rate shock' when people stopped applying for loans when the rates went up, but soon afterwards applications started being made again. However, we have seen a sea change in the attitude of loan providers; when previously they were perhaps too lax in their lending criteria, we are now seeing the opposite. The fall in unsecured loans can only be traced back to providers becoming much more stringent in their lending criteria.

"There has also been a drastic reduction in the number of secured loans in the market - 12 months ago, a secured loan broker would have up to 12 lenders to choose from when placing an application. This is now down to just three or four lenders, and they have all raised their scorecard criteria cutting volume back further.

"Applying for a loan has no doubt become trickier in the past year, with a decreasing choice of products and raised lending criteria, finding a suitable product has become harder for many prospective borrowers. However, if you do need some extra cash, there are still products available and we have recently seen personal loan rates fall for the first time since the Bank of England started to reduce the base rate."