TSLE2021: ‘Second charge loan climb back is well underway’

  • 11/02/2021
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TSLE2021: ‘Second charge loan climb back is well underway’
Despite the significant drop in April and May 2020, the second charge lending climb back is well underway, says Matt Tristram, co-founder at Loans Warehouse.

Finance and Leasing Association (FLA) figures out this morning, also confirm demand has come back up since the crisis-low in May last year as the quarterly rate of contraction has eased.

New business volumes fell by 73 per cent in Q2 2020, by 52 per cent in Q3 2020, and by 30 per cent in Q4 2020.

Speaking at the virtual Specialist Lending Event 2021, in association with Specialist Lending Solutions, Tristram (pictured) said lending volumes in November 2020 tipped over £80m, getting close to where they were at £100 to 110m per month pre-pandemic.

“The biggest difference is the number of active lenders with some still paused with the restrictions [so] there are just three key lenders still pushing the market – Optimum Credit, Oplo and United Trust Bank make up just under 70 per cent of that £80m that was lent in November. Other lenders like Norton, Equifinance and West One, [their] lending is increasing slowly and it’s lenders like that and Together pushing their numbers up, which will get us back to where we were before,” he added.

“There are restrictions, if you’re not working or on furlough, we can’t lend, but for the people who are working and have adapted, the market has adapted with you,” he said.

Richard Bond, personal finance director, Crystal SF said home improvements and debt consolidation still offer the best opportunities for second charges.

“Looking at some stats from rates.com, 89 per cent of the millennial age so 25 to 34 year olds are looking to undertake renovations this year like loft extensions. Although debt consolidation took a back seat in 2020 it will come back this year as there’s still a lot of pent up demand there,” he added.

He also noted that plenty of portfolio landlords may still be looking to capital-raise through second charge bridging, especially with the end of the buy-to-let stamp duty holiday coming up.

Matthew Arena, MD, Brilliant Solutions, said the market might look a little different but the opportunities are very similar.
“It’s no surprise to hear abut home improvements and debt consolidation but on the criteria front we are still looking at income stretch and underwriter flexibility and these things put secured loans head and shoulders above remortgages in certain scenarios. I don’t think those fundamentals have changed which is a real positive.”

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