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Barclays stops giving secured loans
by MoneyDoctor Wednesday 09 July, 2008
We all know that credit cards and mortgages have been proving more difficult to obtain in the last few months.
Now, it seems that secured loans are under threat too.
This is because Barclays has withdrawn from the secured loan market. It will stop offering new loans from August 9 but those of you who have existing loans will not be affected.
Barclays provided homeowner loans through its Firstplus business, whichisbest known for its TV adverts featuring Carol Vorderman.
The freeze on new business will leave its 128,000 existing borrowers unaffected, but about 300 jobs will go from a staff of 430. About 130 people, who also process loans for the Fair & Square brand, Barclayloan and Barclaycard, will be retained in Cardiff to look after existing customers. Barclays said its decision was a result of "slowing demand".
It was also revealed that Carol Vorderman is to quit after 10 years fronting their TV adverts after her contract with them came to an end. Anti-poverty campaigners have argued that Firstplus encouraged you to over-extend your borrowings and accused Vorderman of exploiting her reputation as a maths expert in their adverts.
Two years ago moneysavingexpert.com launched a campaign to persuade her to step down, but she refused. It claimed the lender made much of its profits from the sale of insurance to protect loans. A clampdown on the sale of payment protection policies was cited by analysts as another reason for a likely downturn in profits.
Claim back your Payment Protection Insurance
Barclays has consistently maintained that Firstplus (which it acquired through the purchase of Woolwich in 2000) was a responsible lender and defaults matched the industry average.
Analysts said it was likely that there was still demand for second mortgages, but that potential customers were likely to have poor credit histories. They also said it was likely the costs of raising loans had become prohibitively expensive for Firstplus as it had for most lenders.
In recent months, secured loan providers have also been tightening their lending criteria. Firstplus, recently reduced the amount it would lend from 125% of a home's value to 95%.
Last year, Barclays tried unsuccessfully to sell Firstplus and Neil Radley, managing director of Firstplus, said:
"In the past year we have tried a whole range of activities to develop our business but the market demand simply isn't strong enough. We recognise this is a difficult time for our people and will be providing all those affected with support and assistance."
Firstplus said the drop in business was the result of customer fears that falling house prices would leave them in negative equity after taking out a second mortgage.
Need a secured loan and having difficulty getting one? You should talk to an impartial adviser who can help you with all current loan options.
Tim Moss, head of loans at Moneysupermarket.com, said:
"We've seen the number of applications for secured loans grow in the last year, as the credit crunch forces people to consolidate their debt. Moneysupermarket had a really good volume of applications going through before this announcement."
Rival comparison website uSwitch said the demise of Firstplus was "a huge blow to the personal loans market and another signal that the consumer credit market is quickly drying up".
A spokeswoman said the departure will leave just seven providers in the secured loan market, down from 18 last year before the credit crunch hit.
by MoneyDoctor Wednesday 09 July, 2008
We all know that credit cards and mortgages have been proving more difficult to obtain in the last few months. Now, it seems that secured loans are under threat too.
This is because Barclays has withdrawn from the secured loan market. It will stop offering new loans from August 9 but those of you who have existing loans will not be affected.
Barclays provided homeowner loans through its Firstplus business, whichisbest known for its TV adverts featuring Carol Vorderman.
The freeze on new business will leave its 128,000 existing borrowers unaffected, but about 300 jobs will go from a staff of 430. About 130 people, who also process loans for the Fair & Square brand, Barclayloan and Barclaycard, will be retained in Cardiff to look after existing customers. Barclays said its decision was a result of "slowing demand".
- Firstplus accused
It was also revealed that Carol Vorderman is to quit after 10 years fronting their TV adverts after her contract with them came to an end. Anti-poverty campaigners have argued that Firstplus encouraged you to over-extend your borrowings and accused Vorderman of exploiting her reputation as a maths expert in their adverts.
Two years ago moneysavingexpert.com launched a campaign to persuade her to step down, but she refused. It claimed the lender made much of its profits from the sale of insurance to protect loans. A clampdown on the sale of payment protection policies was cited by analysts as another reason for a likely downturn in profits.
Claim back your Payment Protection Insurance
Barclays has consistently maintained that Firstplus (which it acquired through the purchase of Woolwich in 2000) was a responsible lender and defaults matched the industry average.
Analysts said it was likely that there was still demand for second mortgages, but that potential customers were likely to have poor credit histories. They also said it was likely the costs of raising loans had become prohibitively expensive for Firstplus as it had for most lenders.
- Squeeze on secured loans
In recent months, secured loan providers have also been tightening their lending criteria. Firstplus, recently reduced the amount it would lend from 125% of a home's value to 95%.
Last year, Barclays tried unsuccessfully to sell Firstplus and Neil Radley, managing director of Firstplus, said:
"In the past year we have tried a whole range of activities to develop our business but the market demand simply isn't strong enough. We recognise this is a difficult time for our people and will be providing all those affected with support and assistance."
Firstplus said the drop in business was the result of customer fears that falling house prices would leave them in negative equity after taking out a second mortgage.
Need a secured loan and having difficulty getting one? You should talk to an impartial adviser who can help you with all current loan options.
- Moneysupermarket affected
Tim Moss, head of loans at Moneysupermarket.com, said:
"We've seen the number of applications for secured loans grow in the last year, as the credit crunch forces people to consolidate their debt. Moneysupermarket had a really good volume of applications going through before this announcement."
Rival comparison website uSwitch said the demise of Firstplus was "a huge blow to the personal loans market and another signal that the consumer credit market is quickly drying up".
A spokeswoman said the departure will leave just seven providers in the secured loan market, down from 18 last year before the credit crunch hit.
