The news that First Plus, is closing it’s doors to new business, is a major shock for the UK loans industry. This decision by Barclays, who own First Plus, will have major ramifications for brokers and lenders alike, not to mention borrowers looking for a loan.
First Plus have built a strong brand over the last few years. Frequent TV advertisements using the high profile celebrity Carol Vordermann have made the lender almost a house hold name.
Providing prime, or near prime loans, First Plus have recently been lending around £150 million per month, even during these credit crunch hit times.
That Barclays want to shut the doors on what has, up to now, been one of the most successful secured loan lenders, seems extraordinary. To damage such a strong brand with this announcement, seems self destructive.
The problem for new borrowers is that First Plus owned around 30% of the prime and near prime lending market, so withdrawing such a large lender from the market will mean that borrowers will struggle even more to obtain secured loans.
With mortgages and remortgages already difficult to find, those who are desperate for additional funding are going to struggle even more now.
Major UK brokers have been placing at least 33% of their business with First Plus. Although there are other good lenders that can take up some of the slack, their lending volumes are far below those for First Plus.
This will mean that the major brokers will start to struggle as there isn’t enough lending capacity to replace that provided by First Plus. I fear that job losses in some of the bigger brokers will result.
Smaller brokers could be forced to shut down, as we are seeing with smaller mortgage brokers.
So the decision by Barclays seems difficult to fathom. It’s impact will reverberate through the finance industry as well as with people looking for loans.