Equifinance said that the transaction, which is named East One 2024 plc, was fully subscribed, launched to market and priced within two weeks.

The transaction completed on 16 April.

Equifinance, led by CEO Tony Marshall, CFO Chris Payne and non-executive director Philip George, was founded in 2012 and, since then, has originated close to £500m of second charge residential mortgages.

The company added that it intends to become a “programmatic issuer”, so securitisation will be a vehicle they will use going forward as a funding source.

The lender said that it “believes its strength lies with its employees, relationships with distribution and funding partners, along with a wide product range that seeks to provide solutions that satisfy a diverse range of customer needs”.

Tony Marshall said: “We are extremely happy with the outcome of this transaction, having developed strong relationships with our funding and distribution partners over the years, who have supported us throughout our journey.

“This transaction provides Equifinance with a best-in-class funding structure, which will enable us to bring to market competitive products and services. However, we will still hold on to our traditional values of service and supplying products that are designed to help consumers achieve their financial goals.”

According to recent figures from the Finance and Leasing Association (FLA), the value and volume of second charge business rose in December, January and February.

Together has lowered first charge rates by up to 1.3%, with rates beginning from 7.99% for a five-year fixed rate and 8.2% for a two-year fixed rate. Variable rates will be available from 10.05%.

Second charge rates have fallen by up to 1.7%, with five-year fixed rates priced from 8.3%, two-year fixed rates from 8.5% and variable rates starting from 10.45%.

Consumer BTL first charge rates will go down by 2.05% and start from 6.95% for a five-year fixed rate and 7.1% for two-year fixed rate.

Second charge consumer BTL five-year fixed rates will start from 7.5%, and two-year fixed rates will begin from 7.65%. Variable first charge rates are priced from 9.05%, and second charge are priced from 9.4%.

Together is also making further changes to its second charge range, with loan sizes from £30,000 to £50,000 qualifying for the lender’s lowest rates, which will be available for customers who have had credit blips in the past.

The firm will be retaining its “smaller loan” range for loans between £20,000 and £30,000. This will start from 9.35% for a five-year fixed and 10.15% for a two-year fixed. Together has also increased the maximum loan to value (LTV) for these smaller loans to 75%.

Tanya Elmaz, director of intermediary sales at Together, said: “We’re pleased to be able to provide even more support through rate reductions across many of our personal finance products.

“At Together, we are keen to show that we maintain a healthy appetite for lending despite the economic turbulence the market has experienced over the past couple of years. Our reduction of rates demonstrates this commitment.”

She continued: “We’ve listened to feedback from our intermediary partners and made changes in line with what they need. Common-sense lending is at the heart of our ethos at Together, and our customers and partners are key to every decision we make.

“We’ve been opening doors for our customers for 50 years now, and remain dedicated to helping them achieve their property ambitions. Our goal is to become the UK’s most valued lender, and we will continue to make decisions based on our customer’s needs.”

Last month, Together launched a £150m development securitisation facility.

She will work alongside Luke Edwards as BDM for the North of England for the second charge team and will help broker partners in the region to support customers.

Blunt joins from Lendle.co.uk, where she was a senior mortgage adviser for over eight years, and before that, was a senior underwriter at Gopher Money for six years.

Ryan McGrath, second charge sales director at Pepper Money, said: “I’m delighted to welcome Claire to the Pepper Money team. She is an excellent communicator, and during her time as a second charge mortgage adviser, she has proven her deep understanding of what it takes to help customers achieve their goals. I know that Claire will be an asset to our team and to our brokers.”

Blunt added: “I have worked in the second charge mortgage market for some time now, dealing directly with customers as an adviser. So, the opportunity to join the leading lender in the sector was too exciting to pass up. I’m looking forward to working with the team to continue growing our lending and exceeding our brokers’ expectations when it comes to service and proposition.”

Pepper Money has been adding to its second charge proposition, adding payout before consent for second charges, launching e-signatures and bringing out consent to follow.

There are many reasons why more customers are choosing to take a second charge mortgage. The trend towards product transfers has been confirmed by UK Finance data, which revealed that 88% of mortgage renewals in Q2 2023 opted for a product transfer, up from 77% during the same period in 2022.

Product transfers may be perceived as easy, but they offer a like-for-like swap without the chance to raise additional capital, and over the course of their mortgage deal, many borrowers develop requirements to raise additional capital.

It may be for home improvements or to pay for a major life event and, in the current environment, there’s a particular demand for debt consolidation.

Recent statistics from The Money Charity underline the reasons behind this demand, showing a 9% surge in total outstanding credit balances in the UK by December 2023.

A survey conducted by Debt Justice during Debt Awareness Week found a record 6.7 million Britons grappling with financial difficulties, with 13% admitting to missing three or more credit or bill payments in the past six months.

There is clearly demand from customers who might want to restructure their finances and consolidate debts to ease monthly payments, and the rise in product transfers is limiting options for many mortgage holders seeking to remortgage, historically a popular route for debt consolidation.

Second charge can help customers tackle ‘unsecured debt’

Enter the second charge mortgage, which offers brokers a chance to assist customers in tackling unsecured debt. In some cases, consolidating debts this way could pave the way for a smoother remortgage application in the future.

While debt consolidation isn’t a one-size-fits-all solution, it can serve as a prudent financial planning tool. By consolidating debts into a single monthly payment via a second charge mortgage, borrowers can potentially lower their monthly outgoings and minimise the risk of missed payments, given that they only have one payment to manage rather than several.

Used correctly, debt consolidation can also lead to long-term financial freedom, with balances gradually diminishing over time. However, it’s crucial to thoroughly assess each customer’s circumstances and objectives and discuss the implications of debt consolidation transparently.

Brokers have ‘pivotal role’ in ‘debt consolidation’

Brokers play a pivotal role in guiding customers through the complexities of debt consolidation. It can prove to be a vital lifeline for many, but there are many considerations.

For example, the implications of converting unsecured balances to secured debt and considering whether a lower monthly outgoing could end up being more expensive in the longer term when accounting for fees and interest over an extended period of many years.

This is why, at Pepper Money, we think it’s important that brokers working with second charge mortgages are fully immersed in the market, so that they are best placed to understand the available options in a rapidly evolving market and things to consider.

With this in mind, we work with a limited number of select partners, to help ensure the best outcomes and highest levels of service for customers.

Figures from the Finance and Leasing Association (FLA) found that the value of second charge business also rose, with a 22% jump to £130m. 

In the three months to February, some 7,331 agreements were made, which was 8% higher than the same period the year before. Over the same period, the value of new second charge business increased by a tenth to £22m. 

The second charge market saw a slight dip when comparing the year to February 2024 to the same period a year earlier. 

FLA’s data showed that the number of agreements was down by 8% at a total of 30,935, while the value of business dropped by 9% to £1.4bn. 

A positive start to 2024 

Fiona Hoyle (pictured), director of consumer and mortgage finance and inclusion at the FLA, said: “The second charge mortgage market has made a positive start to 2024 as new business volumes increased by 10% in the first two months of this year compared with the same period in 2023.

“In the 12 months to February 2024, new business volumes were 8% lower than in the same period in 2023.”

Most borrowers consolidating loans 

Hoyle added: “The distribution by purpose of loan in February 2024 showed that 60% of new agreements were for the consolidation of existing loans, 13% for home improvements, and a further 23% for both loan consolidation and home improvements.

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

In March, the FLA reported that second charge business volumes rose 2% in January.

On the criteria side, UTB has created new criteria categories Prime-Plus, Prime and Near Prime. They were previously known as 0-Status, 1-Status and 2-Status respectively.

The lender said that it had introduced “new acceptable adverse rules” across its entire range, which will help meet “wider customer needs”.

Within its first charge range, its Bank of England (BoE) lifetime tracker interest rates begin from plus 2.19%.

Two-year fixed rates are priced from 6.44%, three-year fixed rates start from 6.39%, five-year fixed rates begin from 5.99%, and five-year fixed rates with two-year early repayment charges (ERCs) stand at 6.84%.

On the second charge side, BoE lifetime trackers start from plus 3.24%, while two-year fixed rates begin from 7.29%.

Three-year fixed rates are priced from 7.19%, five-year fixed rates start from 6.59%, and five-year fixed rates with no ERC stand at 7.89%.

Buster Tolfree (pictured), director of mortgages at UTB, said: “The mortgage market is a dynamic place to hang out, and we understand how important it is to respond to changes quickly, especially when brokers at the coalface tell us that, with a few straightforward alterations to our criteria, they may be able to introduce a lot more customers.

“Our new and revised criteria, combined with rate reductions across our entire residential mortgage product range, give brokers an even more compelling reason to talk to us about any specialist mortgage applications.

“Our willingness to lend on non-standard property types in unfavoured locations and to customers with complex incomes and historical payment blips means we’ll take a view on even the most challenging of cases.”

UTB reported £1.8bn in gross new lending in 2023, slightly down from £1.9bn in 2022.

The lender also recently made a trio of promotions, with new roles for Chris Pedlar, Jigar Patel and Hannah Oades.

The lender said that the change will “further accelerate the application process” for second charges and cut the time from application to completion by up to 15 days.

It comes after the firm added consent to follow for second charge mortgages, which allows the lender to issue a mortgage offer when consent from the first charge lender is the only outstanding issue.

Ryan McGrath (pictured), second charge sales director at Pepper Money, said: “The launch of payout before consent is the latest enhancement to Pepper Money’s second charge mortgage proposition, which continues to go from strength to strength.

“Where a customer’s first charge mortgage is held with one of 21 approved lenders, we’ll be able to reduce the time from application to completion by up to fifteen days, providing even faster access to funding.”

He continued: “This latest enhancement, which follows rate reductions and the launch of e-signatures earlier this year, will speed up the second charge mortgage process and provide brokers with greater certainty in helping their customers to achieve their financial goals.

“Consistently delivering outstanding service is a core focus for us at Pepper Money. We work with a closed panel of intermediary partners with whom we build close working relationships to ensure the best possible customer results.”

The latest second charge figures from the Finance and Leasing Association show that there has been a two per cent annual uptick in January in the number of new agreements to 2,346.

The value of new second charge business has also gone up by nine per cent year-on-year (YOY) to £113m.

At the British Specialist Lending Senate, several people said that second charges would become increasingly popular as borrowers do not want to disturb their lower fixed rate but want to explore other options of additional borrowing.

Rumours of new lenders entering the market have also spurred on innovation from current lenders with a widening of criteria and increased flexibility.

Data from Knowledge Bank that have been collected for a dual-branded Pepper Money Specialist Lending Study showed the range of questions asked by brokers relating to second charge cases had broadened. 

The analysis of behaviour and trends on the Knowledge Bank platform showed there was a rise in individual criteria searches with 77 more occurring. 

The top search terms for second charge mortgages were debt consolidation, debt management plans, defaults over £300 or registered in the last three years and credit repair. 

This corresponded with searches for mainstream residential mortgages, where the top five searches were missed or late payments, defaults registered in the last three years, defaults registered more than three years ago, capital raising for debt consolidation and defaults over £500. 

Rising interest in second charge mortgages

Nicola Firth, founder and CEO of Knowledge Bank, said: “It was interesting to see that the top causes of adverse credit in the Pepper Specialist Lending Study mirrored exactly what we’ve seen brokers searching for on Knowledge Bank when trying to help their clients. “Missed or late payments” dominated searches. 

“Second charge mortgages have been a talking point throughout the year. They provide a means for clients to reset their finances and get back in control. It is a route that requires specialist training to complete, but one that offers a more holistic approach to the advice journey for clients. You can see from the top five searches why second charges are such a hot topic, and the advice around these is key.” 

Ryan McGrath (pictured), second charge sales director at Pepper Money, added: “According to our Specialist Lending Study, the most popular use for a second charge mortgage amongst those customers surveyed is for home improvements. Only one in four people (27 per cent) would consider using a second to consolidate debts if it reduced their monthly credit bill. This is probably indicative of the general lack of customer awareness of seconds, as the top Knowledge Bank search term for the product last year was debt consolidation. Plus, the majority of our completions are for debt consolidation. 

“With the ongoing cost-of-living crisis continuing to put a squeeze on household finances and more people turning to credit to cover day-to-day costs, brokers have an opportunity to improve awareness of seconds and help customers get their debts under control and reduce their outgoings through debt consolidation. Simplifying multiple debts into a single repayment not only makes things simpler but can also dramatically reduce the cost of repaying that debt. It may not be right for everyone, but we think brokers will see even higher demand for second charge mortgages for debt consolidation in 2024 than they did in 2023.” 

From research last year, Knowledge Bank found that the financial landscape continued to challenge lenders and borrowers.

The lender aims to reduce the application to offer time by five days by giving borrowers a binding offer with special conditions. 

UTB said first mortgage lenders sometimes placed a restriction at the Land Registry, which is required for consent to be given before a second charge loan can be offered. The lender said this was usually delayed and was often the only outstanding action on an application. 

However, issuing an offer without consent or without a special condition for consent could put a borrower in breach of their first charge mortgage and deliver a bad outcome, the lender said. 

UTB’s binding offers with special conditions are applicable against non-affordability linked requirements, which allows the requirements to be provided after an offer has been issued and before completion. 

This can be used when the first charge lender has given consent to a second charge, where there are up to date redemption figures and in circumstances where bank details for items of debt consolidation have been provided. 

This can also apply where there is a deed of consent for non-dependent residents. 

UTB said feedback from a pilot of the policy resulted in a five-day reduction in the application time to offer. 

Buster Tolfree, director of mortgages at UTB, said: “We entered the second charge market to shake it up, and nearly 10 years on, we’re still innovating and improving to grow the market and help our brokers complete more business.

“Speed to offer and completion is probably the most important success factor in a second charge loan application. Reducing a customer’s wait for a binding offer by five days is a huge reduction, and what we have seen in the pilot is that the reduced delay significantly increases the possibility that the loan will complete.” 

He added: “Both we and brokers waste less time on abandoned cases and are more productive and profitable as a result. And customers get their money quickly to crack on with their home improvements or alleviate their debt worries. It’s a real win-win-win.” 

Earlier this month, UTB launched product transfer options for select loans.

Pepper Money brings in e-signatures for second charge

Pepper Money has updated its process to allow e-signatures on second charge offer documents. 

This will include the mortgage deed and is expected to speed up the overall process. 

The lender said it would allow eligible borrowers to receive an offer immediately and reduce the time it takes for a mortgage deed to be completed and returned. 

Pepper Money said this would also prevent circumstances where borrowers do not return all the required documentation or return it incomplete. 

Ryan McGrath, second charge sales director at Pepper Money, said: “The launch of e-signatures further enhances Pepper Money’s market-leading second charge mortgage proposition, making the process quicker and easier for brokers and customers.

“It also delivers a number of less-obvious advantages. By reducing printing and postage, e-signatures will further strengthen Pepper’s ESG credentials by reducing our carbon footprint, and a more digital process will also enable us to invest more resources in further elevating the service we provide our partners.

“Consistently delivering outstanding service is a core focus for us at Pepper Money, which is why we choose to work with a select number of intermediary partners with whom we can build a close working relationship to ensure the best possible customer results.” 

The lender said this would allow it to potentially launch new product types and would boost its lending capacity. 

Wider strategy changes 

As well as the new funding facilities, the lender has appointed Harriet Merriman as business development manager (BDM) to enhance its broker support. She will be responsible for the lender’s key master broker accounts across the South of England and Wales. Merriman joined from Central Trust, where she was for six years, most recently as southern BDM. 

The lender has also reduced rates across its range and changed its credit bureau from Experian to Equifax, which it said would enable it to automate decisioning and underwriting. 

Selina Finance offers a home equity line of credit (HELOC) product that sits alongside a borrower’s existing mortgage over a two- or five-year period. This is available up to 85 per cent loan to value (LTV). 

The lender has been revising its proposition in recent months, including the introduction of pre-consent funding on its second charge mortgages. This is available on loans of up to £100,000 where the first charge loan is taken out with a specified lender. 

Darvish Heshejin, VP of growth at Selina Finance, said: “I’m delighted to announce the transition of our funding structure and the reduction of our second charge mortgage rates. We’re more confident than ever with our product, service and technology proposition, and look forward to growing with our partners in 2024.” 

James Cuby, managing director at WAM, added: “We’re absolutely thrilled to announce our new partnership with Selina in their effort to empower UK homeowners with low-cost, tailor-made loans.” 

Ian McLaughlin, CEO at Vanquis Banking Group, said: “We’re delighted to have entered a funding partnership with Selina that offers innovative consumer-secured loans, as we continue to develop our own secured lending ambitions in markets less-served by mainstream banks.”