Second charge mortgage volumes fall by 10 per cent annually in March – FLA

Data from the Finance and Leasing Association (FLA) revealed that the value of business also dropped, with a 12 per cent year-on-year decline to £123m. 

Despite this, the FLA said March saw the highest level of business for the year so far. 

In the three months to March, both the value of new business and the number of new agreements saw just a five per cent decrease to £333m and 7,446 agreements. 

For the 12 months to March, activity was up when compared to the same period a year ago.  

The value of new business was 24 per cent higher at £1.5bn, while the number of new agreements rose 17 per cent to 33,384. 

Fiona Hoyle (pictured), director of consumer and mortgage finance and inclusion at the FLA, said: “March saw the second charge mortgage market report its highest level of new business so far this year and the first quarter ended with new business volumes only five per cent lower than in Q1 2022.   

“The distribution by purpose of loan in March showed 58 per cent of new agreements were for the consolidation of existing loans, 14 per cent for home improvements, and a further 22 per cent for both loan consolidation and home improvements.” 

She added: “As always, customers who are concerned about meeting payments should speak to their lender as soon as possible to find a solution.” 

Nick Jones, director of Freedom 4 Intermediaries, the specialist second charge mortgage distribution department of broker firm Freedom Finance, said: “Second charge mortgage new business fell in March but 12-month volumes are up substantially following extremely strong demand last year. With March recording the highest level of new business in the second charge market this calendar year, it looks like demand is returning as we approach the end of the Bank of England’s interest rate hiking cycle.

“Second charge mortgages remain an attractive proposition for many homeowners who are exploring the most appropriate way to raise capital to consolidate debt, finance home improvements or achieve a wide variety of aspirations through the equity they have accumulated in their property. Given fixed rate mortgages have more or less tripled over the past 18 months, remortgaging may no longer be a viable option for people on low fixed-term rates which could provide a tailwind for the second charge market over the coming months.

“While second charge mortgage rates have risen – as they have throughout the secured and unsecured lending sector – shopping around between different providers is vital for borrowers and intermediaries to secure the products that will be most appropriate to meet individual circumstances and objectives.”