In partnership, Enterprise Finance and Together arranged and funded £4.3m in second charge transactions in February.
From the 21 March, to comply with the Mortgage Credit Directive (MCD), second charges will be subject to the Mortgage Conduct of Business (MCOB) rules, which applies stricter affordability and stress testing to applicants’ loans than the sector’s current handbook.
Post-MCD, there will be little difference between the way in which first and second charge loans are underwritten and brokers advising on secured loans will need to be level three CeMAP-qualified by 2018.
Enterprise’s MCD-compliant service went live on 15 February, manned with fully CeMAP-qualified advisers.
Harry Landy, sales director of Enterprise Finance, said: “February’s success is a welcome reward for both companies after working hard to prepare for the transition to new MCD-regulated processes.”
Second charge lenders and brokers have warned that business volumes within the sector could be adversely impacted as it adjusts to tougher affordability checks and the Financial Policy Committee’s requirement to stress loans by an additional 3%.
Managing director of Precise Mortgages Alan Cleary predicted a 20% drop off in second charge lending due to affordability changes. Research carried out by Mortgage Solutions found that United Trust Bank and Precise were the only lenders to openly be using the 3% stress test, which MCOB prescribes its lenders to follow.
