The latest Enterprise Finance Secured Loan Index has stated that March saw a 13.7% increase in secured lending.

£75.5m of second charge mortgages were taken out by homeowners in March, up from the £66.4m transacted in February and a five-year high for the sector. The total amount lent on an annual basis now stands at £799m, a 19% improvement from the previous 12-month period.

“March’s secured lending activity represents the market shifting up a gear after a solid start to 2015 and shows that demand for consumer credit remains keen,” said Harry Landy, director of Enterprise Finance.

“Monthly and annual improvements of almost 14% is further evidence that public attitudes to borrowing continue to improve as the economy recuperates to something resembling a clean bill of health.

“Annual lending of £799m represents a significant increase from the £672m seen in the twelve months to March 2014 and if the secured loan market continues to grow at this rate, then this time next year we won’t be far off talking about a billion-pound industry. How smoothly the secured loan sector reacts to being regulated in the same manner as mainstream mortgages when the switch occurs next March will obviously be a determining factor in when that particular landmark is reached, but it shouldn’t represent a significant challenge to further growth.”

The report said the average secured loan size in March was £61,347. This represents a 14% increase from January and a 3% annual change.

Typical loan to value ratios presently stand at 56% – down from 60% in January – and the average first charge that secured loans are currently sitting behind is £241,003, a minor increase from the £234,313 witnessed in January.

Home improvements continue to be the most common reason for individuals using secured loans, currently accounting for 54% of all second charge mortgages, a 7% increase from January. Debt consolidation remains the second most popular motivator for secured loans. Purchases moved ahead of access to capital as the third most common reason cited.

Landy added: “Average loan sizes hovered around the £50,000 mark throughout 2014, but the increase beyond £60,000 in March sees typical transactions return to the sort of level we experienced last spring. Given that home improvements continue to be the most popular reason for taking out a secured loan, it could well be that individuals are accessing larger tranches of secured finance to pay for work to their houses as the weather warms up.

“With cost of living concerns more muted than they have been previously, we are likely to see a continued trend of individuals using secured loans to finance larger projects and purchases rather than to finance more everyday expenses.”