All areas of the home owner loan and mortgage market have been affected since the onset of the credit crunch three years ago. However, one of the worst hit areas of the loan market has been that of buy to let loans.

Despite a rising demand for rental property from individuals who are unable to obtain a home owner loan or get onto the property ladder in the current economic climate, buy to let lenders have been restricting the availability of loans for landlords through tight lending criteria and lower maximum loan to value ratios.

But the latest figures from the Council of Mortgage Lenders (CML) have shown a significant increase in the number of buy to let loans being approved during the second three month period of this year.

According to the CML figures, there were a total of 24,900 new buy to let loans approved between April and the end of June this year, compared with 22,000 during the first three months, an increase of 13 per cent overall.

On a year on year basis, the number of new loans has also risen by 15 per cent, compared with the same time last year. Despite these increases though, the amount of new lending on buy to let loans is still only around a quarter of the amount it was prior to the credit crunch.

Michael Coogan of the CML said “The buy to let market has continued to grow, albeit slowly, throughout the period since the credit crunch. And with fewer people able to afford the entry costs to home ownership, as well as the pressure on social housing, tenant demand for private rented property will remain strong.”

“Finance for private landlords, whether institutional or individual, is crucial if the UK is to have enough homes to meet the needs of the population. Funding conditions for lenders remains tight, but there is every reason to expect the buy to let sector to continue to make a powerful contribution to helping meet the country’s varied housing needs.”

When people are looking for a new home owner loan or mortgage, in many cases they just go to the high street and see what the large banks and building societies have to offer on their loan deals…big is beautiful, right?

But it may be of financial benefit to look at the smaller lenders and loan companies at the moment according to one Independent Financial Adviser (IFA), particularly due to the recent falls in the cost of borrowing money on the wholesale markets.

The latest swap rates, the rate at which banks and building societies borrow funds to be able to offer loans, have fallen in the last week or so and it seems more likely that the small independent banks and building societies are more likely to pass on these savings to their new loan customers than the large high street giants are.

Large lenders typically borrow funds in large tranches, which means that if they already have funds in reserve, they will not benefit from the cheaper rates, whereas a small lender is more likely to only borrow small amounts at a time and therefore will benefit from the reduction in swap rates at the moment.

The other factor, is that many of the smaller lenders are mutual societies and therefore do not have shareholders to pay out, or have not got themselves into the same financial mess as many of the large banks and therefore do not need to restore their balance sheets.

All these factors mean that small building societies are in a better position financially, than many of the large high street institutions, to be able to offer cheap loan deals to their customers.

Many of these small lenders are regional, but may be accessed by intermediaries and loan brokers, which adds strength to the argument that anyone looking for a new cheap loan should seek independent financial advice first.

As the UK economy continues its slow mending process, there are more signs that loan companies are starting to relax their lending criteria slightly and in some cases, actually return to the loan market, as the number of loan products available on the market continues to increase.

One secured loan packaging company, V Loans has just announced that it is extending its range of product providers as it is adding Norton Finance Services to its panel of loan providers for its customers.

V Loans now claims to have one of the widest choices of loan products and providers, from the whole of the secured loan market and is able to provide secured loans for borrowers up to a maximum loan to value of 70 per cent at competitive rates of interest, compared with many of the high street bank secured loan products.

The new range of loan products also means that V loans can now offer loans for buy to let and commercial property, flexible loans which allow overpayments and payment holidays and a limited range of sub prime, or bad credit loans for those borrowers with small County Court Judgements (CCJ’s), or defaults more than two years old.

V Loans only deals with financial intermediaries and loan brokers and this emphasises the need for individuals to seek independent financial advice when looking for a new secured loan, rather than just going to their own bank.

Dave Pinnington, Business Development Manager at V Loans said “It is great news for intermediaries that V Loans now has access to Norton’s Product range. Apart from offering good products and excellent service from out latest lender, this provides yet more evidence that the secured loans market is alive and kicking.”

With the Bank of England Base Rate of interest at an all time low of just 0.5 per cent at the moment and remaining at that level for the past eighteen months, many borrowers are currently enjoying cheap loan repayments and in some cases have become complacent about the cost of their loans.

But a new report from a UK think tank has warned that it is quite possible that the base rate will have to be increased to around 8 per cent within the next two years, if the Bank of England is to stay in control of inflation.

The report from The Policy Exchange warned that although the UK could well suffer a double dip recession, this would be followed by a period of intense growth, which could push inflation up to around 10 per cent, forcing the Bank to increase interest rate on loans in order to combat this.

This could have a crippling effect on the finances of many individuals in the UK with outstanding home owner loans, currently on low loan rates. An increase of 7.5 per cent in interest rates could mean a difference in monthly loan repayments of around £625 per month on a loan of £100,000.

Although many individuals are currently enjoying the extra money in their pockets at the moment due to cheap loan rates, they should focus on repaying as much of their loan debts whilst interest rates are cheap, in order to try and avoid an expensive time in the imminent future.

Andrew Lilico of The Policy Exchange warned that if borrowers did not reduce their loan debts quickly, the Bank of England may be forced to keep interest rates low in order to avoid massive loan defaults.

Whilst this may seem like good news, it would have the eventual effect of pushing inflation up to possibly 20 per cent, with even worse eventual consequences for those with loans.

In the currently ever shrinking world of financial services and loan companies, yet another secured loan provider has been subjected to a management buy out this month.

Gopher Money has just completed the purchase of the secured loan brokerage Creditflex, who provide secured loan sourcing for a large number of financial advisers and loan brokers from across the whole of the secured loan market place.

The three Directors of Gopher Money, Mark Prideaux, Sean Byrne, formerly of the Evolution Consumer Group, which includes the companies: Debt Matters and Creditflex Loans and Mortgages and Chris Birks, formerly of Creditflex loans, have more than 50 years worth of experience in financial services between them and have largely been responsible for building Creditflex into one of the UK’s largest brokerages for secured loans, along with Debt Matters in the personal loan debt management sector.

As the economy of the UK slowly starts to recover and banks and building societies begin to return to offering loans once again, Gopher Money feel that now is an ideal time to develop the secured loan brokerage business, along with offering debt management services for those borrowers struggling with their existing loans.

Gopher Money have developed key links with lending organisations and financial intermediaries and loan brokers and feel that they are now well placed to take full advantage of the improving secured loan market and build the new company into one of the UK’s leading firms for financial services and secured loans within the next twelve months.

Mark Prideaux, Chairman of Gopher Money was extremely positive about the buy out, he said “The Creditflex Loans and Mortgage Ltd business has been through some tough times in recent years. There has never been a better time to invest in the secured loan market place.”

“We are looking to provide a level of service that is unparalleled throughout our industry.”