Second Charge Lending
Specialist intermediaries overwhelmingly positive about 2023 business
The majority of mortgage intermediaries working in the specialist market are optimistic about the year ahead, a survey has found.
Together conducted a poll with its intermediary partners and found that 82 per cent were either very confident or somewhat confident about the market outlook over the next 12 months.
Almost all (95 per cent) were either extremely, very or somewhat confident about their company’s business in the next 12 months.
It was revealed that 26 per cent of intermediaries expect their business to grow significantly in 2023, while 42 per cent predict it will grow by a small amount. A further 24 per cent said their business will maintain its current levels while eight per cent said it would reduce either slightly or significantly.
This was put down to an expected boost in bridging and second charge business.
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Bridging and second charge set for growth
The bridging and second charge markets were pegged as primary areas for growth in 2023 with 66 per cent citing bridging as an opportunity and 53 per cent saying second charge. Some 48 per cent expect a rise in remortgage business.
Brokers said the rising cost of living, the need to consolidate debt and increased mortgage costs would drive the use of second charge lending. As for bridging, brokers speculated that buy-to-let borrowers would turn to this loan type to avoid rising mortgage rates and costs. It was also predicted that homeowners would use bridging to break property chains.
Overall, 97 per cent of respondents said the need for specialist lending would increase this year. Nearly two-thirds (63 per cent) expect this to come from remortgagors while 61 per cent said self-employed borrowers would drive the sector’s expansion.
More than half (53 per cent) of intermediaries polled said people with impaired credit would bolster the market, while 37 per cent said buy-to-let and 18 per cent expected to see more business from later life borrowers. Just three per cent of respondents thought the first-time buyer market would drive specialist lending.
Intermediaries suggested there may be challenges for the market despite expected growth, with two thirds citing rising rates and 60 per cent saying the cost of living could be a barrier.
‘The specialist sector is set to grow’
James Briggs, head of intermediary sales – personal finance at Together, said: “More so than ever, the role of the intermediary is going to be incredibly important in supporting customers and helping them find the right product to suit their needs.
“As a nation we’re currently grappling with the cost of living crisis, rising interest rates, upcoming changes to EPC regulations for landlords – the list goes on. Whilst rates are gradually stabilising on the high street, many major lenders have tightened their criteria preventing countless clients from accessing the borrowing they need.”
He added: “While overall transaction volumes may soften in 2023, the specialist market share is set to grow, as this sector has the ability for a more flexible, individual approach to reviewing applications.
“This re-emphasises the hugely important role of the mortgage intermediary and packager, and means there are strong opportunities for them to grow their businesses and reach more clients than before.”