On one hand it’s possible that this will damage secured loan sales as currently, a lot of business is written at high income multiples. From March, when loan brokers are obliged to carry out affordability tests, many consumers won’t be deemed able to repay and so will be declined.

This is the argument Precise Mortgages managing director Alan Cleary put forward in a panel debate at the Financial Services Expo in Manchester last week.

His views are echoed by Maeve Ward at Shawbrook Bank who says that stress tests could lead to more secured loan applications being rejected.

“There could be a drop off in second charge lending figures due to tighter controls and more affordability tests,” she warns.

“Consumers will be stress tested for second charges at either 3+3 or 3+1. Some people will have affordability issues and this will lead to a decrease in the level of business.”

However, Ward also says that the MCD will bring an opportunity for brokers to grow their second charge business.

“From 21 March mortgage advisers will have to disclose second charge mortgages during the remortgage process. This increase in consumer awareness will lead to an increase in business as it will be a more viable option for many,” she says.

“At the moment consumers might go to aggregator sites for secured loans but mortgage brokers offering this option will grow this part of their business.”

Ward says there are three important things to consider concerning second charge loans from next March: awareness, education and technology.

Consumer awareness will be increased by advisers discussing secured lending with remortgage customers. In turn, lenders will need to educate brokers so they are comfortable selling second charge loans. And both advisers and lenders need the right technology in place to ensure a smooth sales process.

Rob Jupp, CEO at Brightstar Financial, agrees with Ward that the MCD will bring new opportunities for mortgage advisers. He says mortgage intermediaries’ obligation to suggest a secured loan as an alternative to a remortgage will increase sales.

“I think there will be a spike in volumes possibly as early as December. Both brokers and lenders will be getting ready for the MCD ahead of March and we will see increases in secured loan lending three or four months ahead of the MCD being introduced,” he says.

“I have a soft concern that some lenders won’t be ready for increased volumes but I’d hope that lenders operating in this space will get people and resources in place ahead of March ready for increased volumes.”

Marie Grundy, managing director of V Loans, is another expert expecting the secured loans market to see an upturn in business come March next year.

“The impact of the new affordability assessment requirements, as a result of the directive, will probably affect some consumers and this may reduce average loan sizes in the seconds market,” she says.

“However I do believe that any fall off from those applications declined on affordability will be considerably outweighed by the surge in business we expect to experience from the intermediary market.”