Brexit not a worry for seconds
The impact of the decision to leave the European Union is likely to have a negligible effect of the second charge market but the blocs regulation are still impacting the sector, according to Stephen Johnson of Shawbrook Bank.
Johnson said the decision to exit the EU would have minimal impact on seconds but said the Mortgage Credit Directive was still the biggest thing affecting the market.
He said: “Brexit is not going to have an enormous impact of the second charge market. What will have a bigger impact is the MCD.”
He said that he believes that brokers will start to wake up to the opportunity presented by second charge and pointed to the size of the remortgage market as a barometer of just how much opportunity there is.
At present there are around £55bn of remortgages completed every year whilst the second charge market is worth around £900m.
“You can’t tell me that’s right and that the seconds market should only stand at £900m,” said Johnson.
But Johnson predicts that more people are going to start considering seconds moving forward.
He said: “The low interest rate environment will accelerate interest in the second charge market.
“We will see people start to wake up to the opportunities of seconds. Ultimately it is a very flexible product and we will see opportunities coming out of the back of the MCD but it will take a while for that to happen.”
Johnson was speaking at the Complete FS Expo which is currently taking place in Southampton.