The figure was unveiled in the first anniversary edition of the Enterprise Finance Secured Loan Index, which predicts a further boost to secured lending in 2016 as a result of the Mortgage Credit Directive.
The report found that second charge lending has bounced back from November’s 12% dip, topping the £98.5m record set in October.
Second charge mortgages have now outpaced the rate of growth in the mainstream remortgage market, rising 59% year-on-year in January, compared to a 32% growth in remortgage lending in the same period.
However, the monthly pace of growth in secured lending is still significantly slower than the £5.8bn of monthly remortgage lending.
The boost in second charge lending means that the market has broken through the £1bn barrier to achieve £1.03bn in annual transactions and a 31% increase since January 2015. Annual secured lending rose from £993m in December.
Sales director of Enterprise Finance, Harry Landy, said the upswing in January was a positive sign in what was the run up to MCD implementation, giving lenders and borrowers increased confidence.
“Brokers are now using second charge lending as an alternative to remortgage products, with both markets expanding rapidly. The increased competition between the two types of finance will only benefit consumers, giving them additional choice when raising capital”, said Landy.
“There are many cases where second charge finance may better suited for clients when compared to remortgaging. These scenarios include – but aren’t limited to – consumers with interest-only mortgages, those with low standard variable rates on their first charges, or self-employed borrowers who are struggling to access the finance they need through other means.
“Intermediaries have increasingly opted for second charge products when serving these types of clients due to the reassurance available from specialist finance experts who are qualified to provide large volumes of specialist finance with quick case approvals.”
A further driver of secured lending growth is the demand for debt consolidation, according to Landy.
“The Bank of England has reported that consumer credit rose by 9.1% in January, the largest rise in unsecured borrowing since 2006. Consumers are turning to second charge finance, as they seek to consolidate their various sources of personal debt,” he said.