Earlier this month bridging lender West One Loans revealed to Specialist Lending Solutions plans to launch into the residential second charge market. Sales director Marie Grundy, who will lead the second charge team, said the move will help the lender to “cater for borrowers who require a bespoke approach to lending, including those who are currently under-served, such as the self-employed, older borrowers and those with less than perfect credit histories.”
The move was met with approval from intermediaries with most claiming clients would benefit.
“Lenders naturally keep an eye on what their competition is up to, even more so regarding new product launches,” said Kevin Wright, director, Positive Property Finance. “If West One grab a slice of this market it may well encourage other current niche lenders to spread their wings. More choice for the end user can only be a good thing.”
Now the specialist broker community believes other lenders may look to capitalise on the market but warn this will only prove successful if mortgage brokers start engaging with seconds.
“We will see more lenders moving in to seconds but given the size of the market right now, and how competitive it is, I expect some may delay their entry until the wider intermediary market has more fully embraced second charges,” said Steve Walker, managing director, Promise Specialist Lending.
“The market will grow massively once all mortgage brokers are dealing with seconds properly. That is some way off unless attitudes change among many brokers and leaders of the first charge industry change. Unfortunately there is still a surprising amount of ignorance about seconds.”
Alistair Ewing (pictured), managing director of The Lending Channel, agreed the size of the market may be currently deterring those looking to enter it. He also believes niche lenders may struggle to adequately offer a diverse proposition.
“I don’t think we will see many more coming to market in seconds specifically as there will be concerns over potential market size and possible saturation,” he said. “And I don’t really see second charge lenders wanting to get involved in other areas of lending like bridging due to the perceived complexities of that market plus possible saturation caused by number of other lenders.”
Wayne Hicklin is loans manager at bridging lender Aspen Bridging. He said while he can see the appeal of the seconds market it’s not something currently on the cards for Aspen.
“Having worked in second charges for 20 years prior to joining Aspen Bridging I can see why certain lenders are diversifying into the second charge market,” he said. “The number of lenders in the bridging market has grown so bridging lenders are looking at other ways to get their money out of the door. Following the MCD changes and the growing second charge industry that seems the logical place to move towards. Aspen’s focus for the foreseeable future is to continue building the bridging business.”