Second charge lending grows 40 per cent annually to £1.6bn – FLA

According to the latest Finance and Leasing Association figures, the number of new agreements in the 12 months to the end of December 222 came to 33,772.

The report said this was nearly a third, 31 per cent, higher than previous year.

In the three months to December there was £372m of new business, up 15 per cent on the same period the year before.

In the same period there were 7,932 new agreements, which is nine per cent up on the same period in 2021.

In December itself there was £999m of new business agreed, which is flat year-on-year, and 2,106 new agreements. The latter is three per cent down on the same period last year.

Fiona Hoyle, director of consumer and mortgage finance and inclusion at the FLA, said: “In December, the second charge mortgage market reported its first monthly fall in new business since March 2021.

“Despite this, new business volumes in 2022 as a whole, at 33,772 agreements, was the highest annual total since 2008.”

She added that over half, 58 per cent, of loans were for consolidating new loans, 14 per cent were for home improvements and 22 per cent was for consolidation and home improvements.

“As always, customers who are concerned about meeting payments should speak to their lender as soon as possible to find a solution,” Hoyle noted.

‘Strong year’ for second charges

David Hendry, chief marketing officer at Freedom Finance, said 2022 was a “strong year” for the second charge mortgage market pointing to the “huge growth in the number and value of new agreements”.

He explained: “The industry benefited from a number of tailwinds through the year due to the macro-economic climate. Rising mortgage rates made remortgaging an unattractive option while the cost-of-living crisis made second charge mortgages an attractive way to consolidate debt.

“For those considering this option, shopping around between different providers remains essential so that borrowers can secure the best available rates for their personal and financial situation rather than just taking the first product on offer from their existing provider.”

“Using digital marketplaces will make this easier as they offer the widest range of lenders and use data to help show customers the deals they are eligible for, while considering their overall financial situation to deliver personalised solutions for their circumstances,” he added.

Speaking to this publication this week for our SLS In Focus Series on second charges, Matt Tristram, Loans Warehouse co-founder said second charge activity had been “flying” until October and then the mini Budget caused rates to go up and dimmed activity somewhat.

His market expectations were that activity would pick up in March, with January and February activity set to be more muted.