Mortgage networks key to second charge growth

Figures from the Finance & Leasing Association last week showed new second charge business fell to £76m in February, down 6% by value and 12% by volume compared to February 2016.

Sinclair believes growth in the market is not going to come from the “odd single broker” but from the big mortgage networks.

A number of mortgage networks currently have second charge master broker panels for broker referrals but these are limited and often provide no direct-to-lender route.

Sinclair said one thing holding back networks and brokers from offering seconds is a lack of technology.

“One of the issues for first charge firms is how easily they can look at a remortgage versus a second charge and the cost of that,” he said.

Sinclair believes if such technology were widely available it could “shift the market”.

Mark Lofthouse, chief executive officer of Mortgage Brain, is planning to launch a new second charge solution within Mortgage Brain in the next few weeks. It will allow a comparison between the current mortgage, a second charge and a remortgage, if further borrowing is required.

Mortgage Brain currently offers Loans Brain, which mortgage brokers can use to source the best second charge mortgage but they can’t compare this against a remortgage.

Lofthouse said: “Mortgage Brain will look at a second charge in exactly the same way as a first charge mortgage and buy-to-let. There’s no new system for an adviser to learn and it will be available on brokers’ desktops at no additional charge.”

The system will support either the advised or non-advised route.

He added: “These major strides in technology will move second charges from the ‘too hard’ box to being ‘normal business’. We anticipate this will result in more advisors recommending a second charge mortgage and move them into the mainstream mortgage market.”

Sinclair however said that it will depend on whether networks prioritise seconds.

“The argument networks have is that they are focusing on a £150bn mortgage market and the seconds market is under £1bn,” he said.

He also said technology is just one part of the equation and the second charge sector needs to communicate its message more effectively if it is to grow its business to business distribution.

“Mortgage lenders are the ones that drive the conversations with the networks in the first charge market,” he said. “In the world of seconds, the lenders are relying on the master brokers to have the conversations with the networks, and the mechanics are not yet right.”