‘Innovation boost for second charge market’
Association of Mortgage Intermediaries chief executive Robert Sinclair has predicted increased innovation in the second charge lending market as regulatory changes draw closer.
Mr Sinclair said that while he had not yet seen much innovation in this area, he expected organisations such as Aldermore to bring out new products.
He said: “We will see more challenger banks doing interesting things around the edges – and from our perspective product innovation is always good.”
His comments came as Prestige Finance, a second charge loan specialist owned by OneSavings Bank, launched a range of buy-to-let products for second charge lending.
| Prestige Finance buy-to-let range for second charge lending; key features |
| The buy-to-let professional landlord product, for three or more properties in a portfolio, has rates from 5.79 per cent, loans from £25,000 up to 75 per cent loan to value, with a maximum loan size of £1m for each property |
| The buy-to-let standard product, for fewer than three properties in a portfolio, has rates from 6.99 per cent, loans from £25,000 up to 75 per cent LTV, with a maximum loan size of £200,000 for each property. |
Source: Prestige Finance
Darrell Walker, head of product and new business for Prestige Finance, said: “Brokers told us a large number of their portfolio clients were unable to release equity without disturbing their main headline rate.
“Also the high rates available would often be the stumbling block for landlords currently benefiting from historic tracker products.”
The second charge market is set for changes next year.
From March 2016 the FCA will begin to implement the EU’s Mortgage Credit Directive, which aims to introduce a European framework of conduct rules for firms selling both first and second charge mortgages.
As part of the changes, the FCA is set to move second charge mortgages, currently regulated as consumer credit, into its mortgages regime.
After 21 March 2016, lenders, administrators and intermediaries will have to hold the relevant mortgage permissions.
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