Economic uncertainty drives increase in seconds market – Clever Lending

by: Sam Kirtikar, managing director of Clever Lending
  • 22/11/2018
  • 0
Economic uncertainty drives increase in seconds market – Clever Lending
An increase in the second charges market suggests economic uncertainty is causing more people to improve their current property rather than move.


We’ve seen an 8.4% increase in people applying for second charge finance in the first half of 2018, when compared to the same time in 2017.

Our data also shows 51% of these second charges were applied for to make home improvements.

With a reported increase in re-mortgage applications, slump in the UK housing market and uncertainty around our economy, this could suggest more people are choosing to improve their current properties – rather than take a potential financial risk of moving.


Switch and second charge

Clever Lending recently helped a customer who wanted to sell their house but wanted to carry out some improvements first to increase its sale value.

As the customer had just come out of an Individual Voluntary Arrangement (IVA), there were no savings available and affordability meant re-mortgaging wasn’t an option.

A product switch with the existing lender almost halved the client’s monthly mortgage payment, which meant we were then able to place a second charge for the home improvements.

Knowledge of the adverse sector meant we were able to help resolve this customer’s immediate concerns and put them on the road to future financial stability.

This case also reflects how people are opting to improve their current properties so they’re more likely to see a bigger return if they do sell in the future when our economy could hopefully be more settled.


Brexit flattening market

To coincide with the increase in second charges, UK Finance has also reported a 9.2% increase in re-mortgage applications in August compared to the same period last year.

This was reinforced by the Office of National Statistics reporting in their July House Price Index that the rate of increase in UK house prices is 3.1%, the lowest UK annual rate since August 2013.

It could be that Brexit worries are flattening the property market, meaning fewer people are moving and more are making improvements to their current properties rather than move.

Growth in the market reinforces the fact there are plenty of opportunities in the current climate for second charges.

It is important to consider seconds as a solution for a refinancing or home improvement enquiry and that brokers are aware of the benefits second charges can offer.


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