Second charge market could top £1bn by year end

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  • 19/05/2016
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Second charge market could top £1bn by year end
The value of the second charge mortgage market could top £1bn by the end of the year, boosted by an increase in the Bank Base Rate (BBR), according to industry insiders.

Speaking at the Financial Services Expo (FSE) Manchester, One Savings Bank sales director Adrian Moloney said the second charge market is currently lending £880m per year, but predicted that the introduction of the Mortgage Credit Directive, a drop in fee charges and advances in technology would contribute to an increase in adviser activity and lending levels.

Other panellists suggested that lending activity will top £1bn this year, particularly if the bank base rate (BBR) rises.

“If the base rate stays the same then I expect lending levels to trickle upwards”, said Brightstar chief executive Rob Jupp. “However, if we do see an increase in BBR then seconds become much more attractive – people will be mobilised to remortgage and seconds will be an option.”

He estimated that the seconds market could be worth £1.25bn in 2017 without a base rate rise, and £1.5bn with one.

Precise Mortgages director of sales, Roger Morris, said buy-to-let second charges could increase considerably as landlords look to release equity from their portfolios.

In a discussion on the increasing number of second-charge lenders who offer advisers direct access to their loans, without the need for a master broker or packager, Morris defended the decision by Precise to offer this route.

“When I was a broker I liked choice and it’s important to choose what you value for yourself. We are now offering two options – come direct to us or use a master broker”, he said.

“I’ve found in the past that when you force advisers to use a master broker, then they often rebel against this, and since our launch, we’ve actually seen an increase in the amount of business going through master brokers.”

Jupp argued that choice is only positive when it is “true choice.”

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