FLA: Second charge lending down

Ryan Bembridge

April 7, 2017

Second charge lending fell on monthly and yearly basis in February 2017, Finance & Leasing Association figures show.

Lending was down by 2% year-on-year, 6% quarter-on-quarter and 6% month-on-month.

Under the Mortgage Credit Directive advisers must consider a second charge alongside a first.

But Paul Day, director of sales and development at Clever Lending, said: “I don’t think the market is showing it’s available.

“Remortgage activity will continue to grow considerably this year but advisers may be pushing square pegs in round holes.

“It’s about education and while I’m not suggesting the regulator bash advisers on the head the FCA should be more forceful.”

Day reckoned the market is struggling due to legacy issues.

He added: “Historically the second charge market has been an unsavoury place; PPI was endemic in the second charge industry 10-15 years ago.

“But now you’ve got good quality products with reputable lenders with no early redemption penalties.

“At the moment the fee situation is all over the place – there are people charging all sorts – but it will find its level in the next 12-18 months.”

There was £864m of lending in the year to February.

Harry Landy, sales director at Enterprise Finance, said: “The second charge market had a slow start to the year, as today’s figures attest.

“However, we are expecting to see confidence building and growth returning in the coming months.

“The industry needs to work together to raise awareness of the benefits second charge mortgages can offer.

“This is particularly important when we engage with intermediaries so they are equipped to best advise their clients.”

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