Mortgages  

Second charge market continues to grow

Second charge market continues to grow

The second charge mortgage market continued to grow in November, with volumes increasing by 21 per cent on the same month a year earlier.

Data released by the Finance & Leasing Association today (January 11) showed there were 2,282 new second charge agreements in November, up 21 per cent on the same month in 2017 and bringing the total number to 23,325 over 12 months.

The value of new business in the market grew to £99m, up also by 21 per cent compared with November 2017, and bringing the total value of the second charge market to almost £1.1bn for the 12 months to November last year.

Fiona Hoyle, head of consumer and mortgage finance at the FLA said: "The market has reported a relatively strong performance in recent months following a steady first half of 2018.  

"The second charge mortgage market is likely to report solid single-digit new business volumes growth in 2018 overall."

Daniel Yeo, managing director at Cardiff Money, said he was not surprised by the increase in lending volumes, having experienced an uplift in second charges and specialist lending enquiries including bridging, commercial and development finance in the year.

He said: "Whilst no one, including myself, in this industry can comment with complete authority with regards to 2019 second charge lending volumes, I believe Brexit and the possible implications of it could pose an opportunity for the market.

"We have seen before that challenges during a volatile and decreasing housing market hit the traditional funding lines first, in particular the high street mortgage lenders."

Mr Yeo said he believes robust, well-funded and well-managed specialist lenders could plug the gap in a time of uncertainty as they were already geared up to deal with risk.  

He added: "This will no doubt result in an increase in second charge mortgage applications as people will always want to borrow, and that need will remain albeit it may be borrowing more out of necessity rather than aspiration in 2019.

"So yes, I am intrigued if not excited about what Brexit will bring, you can’t change it so embrace it and welcome the increased applications that will no doubt follow."

rachel.addsion@ft.com