Second charge market stalls in October

by: Edward Murray
  • 12/12/2016
  • 0
Second charge market stalls in October
Second charge mortgage lending stuttered significantly in October, according to figures from the Finance and Leasing Association (FLA).

In data released for October, the FLA found that at £71m, second charge mortgage new business was down by 15% in value and 22% in volume, compared to October last year.

However, when looking at the 12 months to October 2016, the FLA found the second charge mortgage market had lent a total of £879m and was up by 10% on the 12 months to October 2015.

Geraldine Kilkelly, head of research and chief economist at the FLA, said: “October was a quiet month for the second charge mortgage market as it continues to adapt to life under the Financial Conduct Authority’s mortgage regime.”

She added: “In the ten months to October 2016, this market reported new business up 5% by value and down 6% by volume.”

Alan Cleary, managing director at Precise Mortgages, said he was not surprised by the recent slowdown and agreed with Kilkelly that there had been a lot of change for the second charge mortgage market to contend with this year.

He said: “From discussing this with numerous people my second charge sales team cite the number of very cheap two-year remortgages available currently, meaning there are less vanilla seconds being proposed by advisers.”

In other areas of the market, the FLA reported that credit card and personal loan new business together grew by 7% compared with October 2015, while retail store and online credit new business fell by 4%.

Looking ahead, Kilkelly said she expected growth in the consumer credit market to slow during 2017. She commented: “The FLA’s latest commissioned research of consumer lending forecasts by Oxford Economics suggests that new consumer credit in the UK will continue to grow in 2017 by around 1%. This compares to a growth forecast of almost 6% in 2016 as a whole.”

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