Gross lending in August fell 14% to £48.9m compared to July which saw £56.6m worth of second charge loans advanced to borrowers, statistics from Loans Warehouse revealed.
The Bank of England figures on the value of mortgage approvals reflected the seasonal slowdown with a less severe drop of 2% month-on-month to £16.2bn of lending.
The number of products available to second charge borrowers increased to 220 from 17 different lenders which Loans Warehouse claimed was a post-credit crunch high.
Last week the Financial Conduct Authority (FCA) published its recommendations for the implementation of the Mortgage Credit Directive (MCD) which is proposing to apply mortgage lending and advice rules to the second charge market.
In an analysis of the directive written for Mortgage Solutions, Sam Busfield, co-founder and director of Loans Warehouse, said moving away from the Consumer Credit Act would provide opportunities for product development.
“The new regime will mean lenders can be more creative with their products; fixed rates, the charging of fees and early repayment charges. Rather than having the prescriptive rules that came with the Consumer Credit Act, the lenders in our industry, who have proven time and again their appetite to lend and demonstrated their creativity, now have the ability to design products for a new landscape,” said Busfield.
Criteria changes are expected from Shawbrook Bank in October while Blemain lanched a fixed rate range of second charges at the start of the month.
The consultation on the MCD closes on 29 December.
Anyone wishing to take part in the consultation can complete the FCA’s form, CLICK HERE, or write to Terence Denness, policy, risk and research Division, Financial Conduct Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.
