Second charge returns to growth

Ryan Bembridge

July 28, 2017

Second charge lending has returned to growth by reaching an annualised £899m in April and then £917m in May, Enterprise Finance’s second charge report has found.

Lending was at £93m in March, up 22% from the month before, after which it reached £79m in April and £87m in May.

Harry Landy, managing director of Enterprise Finance, said: “One year on since implementation of the MCD (Mortgage Credit Directive), we are seeing the quality of advice greatly improved and an overall customer journey that is now in line with the experience of taking out a first charge mortgage.

“Moreover there’s a proliferation of products available on the market, meaning client needs are better able to be served. We have seen rates become more and more competitive, with lenders like Masthaven starting at 3.74%, and new entrants showing interest such as West One launching a secured lending proposition.

“What’s important now is that brokers are aware of the wide variety of property financing available so they can best advise their clients accordingly. They need to understand the role second charge mortgages can play for their clients, as understanding its benefits will help to unlock further growth for the market.”

Enterprise admitted the MCD, introduced in March 2016, initially caused disruption which held the industry back.

However it said the benefits of directive are starting to come through and the market is coming into the mainstream as application processes – with first charge being offered alongside second – improve across the industry.

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