Significant rise in second charge lending predicted post MCD

The directive, which brought second charges under the scope of the Financial Conduct Authority’s mortgage regulation, came into play on 21 March.

Liz Syms, director of Connect Mortgage Club, said that residential advisers will “no longer be able to ignore” second charges.

“The new regulation will definitely increase awareness and advisers will have to decide whether they include it in service or refer it on,” she said.

“Lenders will have to decide how they act because traditionally it’s an area for master brokers – it’s heavily packaged and they do the valuation and contract before passing it on to lenders.”

Syms said that Connect has already seen a significant increase in enquiries into second charge lending.

“Whereas previously we would have had maybe three or four a year, we are now getting that many a week”, she said.

Rob Jupp, chief executive of Brightstar Financial, said that any initial reduction in second charge lending would be turned around before year-end.

“I am not quite a lone voice in the industry in saying this, but any initial contraction on volumes will be made up throughout 2016 and we are predicting higher levels of second charges than 2015.

“More consumers will be offered and have access to second charges and it will be taken more seriously.”