2020 started with an abundance of optimism in the second charge market off the back of the momentum built in 2019 where new business origination grew by 19%.
The pandemic had an immediate and dramatic impact on the mortgage sector with the second charge market hit particularly hard dropping to a crisis low of £21m lending in May. Coupled with the influx of payment holiday requests and the immense challenges this presented for both funding liquidity and operational resource, it seemed the perfect storm had been created. For those of us trading through the financial crisis of 2008 you would have been forgiven for thinking “here we go again….”.
But here’s the good news. Unlike 2008 the market has rebounded with gusto with the latest figures from the Finance and Leasing Association confirming completions levels of £68m in October. With many predicting a strong Q4 things are certainly looking up.
Make no mistake there is an even bigger opportunity for seconds to continue this impressive growth trajectory into 2021. Remortgages are predicted to remain flat following the increased popularity of both product transfers and 5-year fixed rates. Home improvements are also on the rise as is the financial intervention of parents and grandparents looking to gift deposits to younger family members seeking their first property purchase.
Let’s make 2021 a year to remember for all the right reasons and I for one am looking forward to playing our part in ensuring second charge mortgages become even more relevant to intermediaries and their clients.
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