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There have been several media reports over the past few months which speculate that there is a limited supply of secured loans available. Secured loans are usually taken out to pay for a mortgage. However, there are various types of bad credit secured loans available too. A secured loan uses assets as collateral for the loan and they are popular because they provide lower interest rates. However, what you will find is that there tends to be a limited supply of secured loans in economic downturns.

This is mainly because borrowers feel that they are even less likely to get their money back each month. As the economy struggles, so do people’s finances. Therefore the amount of people who get accepted is a lot lower than it would be if the economy was doing fine.

In the last quarter of 2010, exerts warned that Britain’s housing market could have been on the edge of a double dipped recession. This is because the amount of mortgage approvals had dropped considerably. In August 2010, there were 31,767 mortgages approved. This showed a drop of 22.3% since August 2009. There was even a drop in comparison to July 2010 where there were 34,219 approvals. As the months went on, fewer mortgages became approved.

It is now thought that house prices will fall by up to 10% by the end of 2011. When speaking about the drop in mortgage approvals in September 2010, Howard Archer, the chief UK economist at IHS Global Insight, claimed:

“Given this backdrop, we suspect that house prices could fall by around 10% between now and the end of 2011. Much will obviously depend upon how well the economy holds up as the fiscal squeeze increasingly kicks in, mortgage availability and the amount of houses coming onto the market.”

A property analyst at Capital Economics, Paul Diggle, also worries that the mortgage sector is unlikely to make much improvement over the next 12 months. He states:

“There is little prospect of a meaningful improvement in mortgage approvals for at least 12 months, but the weak mortgage market could continue for much longer than that.”

These days the chances of getting approved for a secured loan are quite slim. Repossessions have actually declined over the last year. However, lenders have deemed that more than £3 billion of assets are toxic. The amount of people applying for a mortgage has also declined thanks to the volatile nature of the housing market.

The public spending cuts are also being blamed for the weaker market. Andrew Goodwin, an advisor from Ernst & Young claims:

“Unemployment levels are high and could rise further as the public sector spending cuts begin to take effect, while household income growth and affordability are poor.”

There are still secured loans available. However, if you are looking for bad credit secured loans then you will find it even more difficult. Those who are considered to be safer borrowers are being given the best chances of approval. As the housing market is not set to improve much over the next 12 months, approvals could further decline.