Second charges shunned by three-quarters of brokers – Brightstar

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  • 24/09/2020
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Second charges shunned by three-quarters of brokers – Brightstar
Three quarters of brokers do not tell borrowers they offer second charge mortgages, according to research carried out by Brightstar Financial.

 

The specialist distributor undertook a study of more than 1,000 intermediaries, including independent financial advisers, directly authorised brokers and appointed representatives.

Some 26 per cent of brokers said they brought up second charge mortgages to borrowers in discussions about their purchase or remortgage or during the term of their product, leaving 74 per cent of intermediaries who do not highlight the option of a second charge.

The most common reason for not talking about second charge mortgages was not having enough time or that they had forgotton to do so.

Michelle Westley (pictured), head of marketing at Brightstar Financial, said: “It’s now more than four years since second charge mortgage lending came under the same umbrella of regulation as the first charge market and brokers have been required to consider second charges alongside other options for capital raising.

“So it’s astounding that so many brokers are still not having conversations about second charge lending with their clients.”

Westley said it was “widely anticipated” that the purchase market will slow down in 2021 with the amendment of Help to Buy and the end of the stamp duty holiday.

She said the second charge mortgage market was set for growth as demand increases from homeowners who want to release capital from their properties.

New second charge mortgage volumes dropped by 64 per cent year-on-year in July with 966 new agreements arranged, figures from the Finance and Leasing Association (FLA) showed.

The value of new business in the month reached £40m, a decline of 65 per cent compared to last year.

Month-on-month, however, both the volume and value of new secured lending increased by 48 per cent and 46 per cent respectively.

 

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At Brightstar we recently carried out some research among a group of more than 1,000 brokers.

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