With the mortgage and home equity markets in crisis, many lending companies have shifted focus. No longer trying to generate business primarily through housing-related loans, Mintel Comperemedia finds lenders increasingly promoting unsecured loans and unsecured lines of credit.
In the fourth quarter of 2007, for the first time in two years, Mintel Comperemedia saw lenders send more direct mail offers for unsecured loan and credit line products than for secured loan and line products. Companies sent approximately 522 million unsecured loan and line mailings to consumers, but they shipped out only 468 million for mortgages and home equity products.
Unsecured loan and credit line products—those which do not require the collateral of a house or automobile—have become much more appealing as the housing market crashes and consumer credit tightens. “Many people have already tapped their home equity and they’re now struggling with credit card debt,” explains Farah Huq, senior research analyst at Mintel. “Personal loans and lines of credit are another way for them to get money for daily expenses.”
In the past year, Mintel Comperemedia reports that lenders have steadily reduced secured loan mail volume in favor of unsecured loan and line offers. Throughout 2007, mailers cut their total offers for mortgages and home equity products by 42% (from 807 million in Q1 to 468 million in Q4). Meanwhile, they increased mailings for personal loans and unsecured credit lines by 17% (from 447 million in Q1 to 522 million in Q4).
“Unsecured loans and lines of credit have become quite valuable to lenders,” comments Huq. “Rather than send out mortgage and home equity offers to consumers who can’t use them, companies are advertising these products to drive business. They’re responding to issues in the marketplace and giving people what they really want and need.”
Source:
http://www.businesswire.com
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