Hull - 23 Dec, 2024 - The global secured loans market is positioned for a historical growth period, with a projected compound annual growth rate (CAGR) of 30.9% from 2024 to 2032, based on new figures from Allied Market Research.
This unprecedented growth is fueled by a surge in home prices and increasing demand for financing. Still, industry figures are also excited by the rise of more flexible lending options, transforming the market and enabling consumers and businesses to achieve rapid growth.
The secured loans market has enjoyed tremendous success in the aftermath of the COVID-19 pandemic, with historically low interest rates contributing to rising homeowner equity. According to CoreLogic Analysis, Q3 2024 saw total net homeowner equity in the U.S. reach a record high of $17.5 trillion.
Home equity provides a vital asset to leverage further borrowing to fuel business ventures, invest in sectors like agriculture, and add further value to existing properties. And it’s resulted in increased demand for financing, especially as interest rates have risen over the last two to three years.
According to Dan Wilkin from The Personal Finance Centre, “Secured loans can offer advantages over other types of loans, including larger loan amounts, longer repayment terms, and lower interest rates.”
However, market research has shown that consumers and business owners are seeking more flexible lending options. Lenders are already responding to this demand by expanding their catalogues globally, with options like fixed-rate loans, Home Equity Lines of Credit (HELOCs), and specialised loans aimed at specific sectors, including commercial, industrial, and agricultural.
One study found that HELOCs made up 17.8% of all home-based loans in Q3 2024, representing a 400% increase from early 2021.
It’s part of the process of further unlocking the potential of the secured loans market to make it more accessible and provide opportunities for stakeholders.
With loan requirements tightening after the 2008 financial crisis, borrowers have often struggled to secure the funding needed to take advantage of opportunities available to them. According to FT Adviser, 58% of UK lenders have noted an increase in the number of rejected applications because of affordability requirements. Many borrowers now turn to the secured loans market to overcome these barriers.
Through the secured loans market, homeowners and businesses can access the capital needed to fuel expansions, purchase equipment, and invest in innovation across all economic sectors. The market is also tackling the problem of underserved populations who were previously unable to access mainstream credit options. PwC UK found that at least one in three adults experience this problem. This move toward financial inclusion unlocks opportunities for economic prosperity and enables lenders to benefit from more diverse product portfolios and achieve higher returns.
With rising inflation and interest rates, the market enjoys a positive outlook for the rest of the decade, but risks remain. Fluctuating interest rates could threaten the ability to pay for borrowers, thus potentially placing their assets at risk. Moreover, the expanding global market is expected to attract tighter regulatory oversight, which may place barriers in the way of lenders and borrowers alike.
It underpins the importance of lenders adjusting to the new reality and borrowers knowing how to choose the right lender for them.
Dan Wilkin, CEO of The Personal Finance Centre said, “The versatility of secured loans is truly remarkable. These financing solutions are empowering homeowners to take control of their financial futures, but borrowers must be aware of the risk to their assets and seek bespoke financial advice before committing to a secured loan.”
The global secured loans market is expected to continue its growth trajectory in the years ahead as the market adjusts to evolving borrower needs. With the combination of increasing home equity and accessibility to financing, this market is expected to become a core driver for the global economy’s financial expansion in the years ahead.
For more information about the benefits of secured loans, please visit The Personal Finance Centre
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Company Name: The Personal Finance Centre
Contact Person: Dan Wilkin
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Phone: 01482 968 600
Country: United Kingdom
Website: https://www.thepersonalfinancecentre.co.uk/
