Mainstream lenders slowly starting to re-lend

Some of the UK’s private lenders are slowly start to relend following the covid-19 break, Financial News reports.

Most of the UK’s high street and private online lenders such as Amigo, Satsuma and Provident were not lending during the covid-19 lockdown – and this was unanimous across the credit industry. However, those looking to short terms loans were able to take advantage of many government schemes including payment holidays on existing loans, car finance and interest free overdrafts.

For many credit and lending businesses during the covid-19 lockdown, when it came to approving loans, there was too much uncertainty surrounding income and affordability. Plus, many immediately put their staff on furlough rather than run up a huge staff bill.

Millions of people in the UK are in limbo over the future of their jobs, with many on furlough and still able to earn 80% of their wages, but unsure if they will still be in employment when furlough ends.

“For lenders, this becomes difficult when deciding to lend to someone for the next 6 or 12 months,” explains Ian Sims, founder of Badger Loans.

“We are pleased to see some of the UK’s larger lenders slowly come back to reality and lending at 30% or 50% of normal capacity. Naturally they want to keep lending because it generates income and more jobs for their staff.”

“Certainly, lenders will be more selective with who they lend to and they may look for people with better credit ratings or those who have income that is not affected by covid-19. Equally, some lenders may prefer those customers who have not taken payment holidays or are relying on government support, but can feasibly earn income and repay future credit on time.”

“In secured lending, there is a feeling of initial opportunism for lenders, especially in borrowing against assets and property development finance. For many private lenders, this current lull period is an opportunity to get deals over the line and finance potential projects, before a potential second wave comes along and puts everything on hold all over again.” “Assuming there is no second wave, we could see lenders offering finance at full capacity in Q4 or by the end of 2020. But if there is a second wave of covid-19, it could be at least another year before we see funding at its fullest – and we may see some small lenders dropping out of the market too.”