Second charge business surges by 48 per cent in April – FLA

Second charge business surges by 48 per cent in April – FLA

According to the Finance and Leasing Association (FLA), the value of new business totalled £127m in April, which was up 54 per cent on last year. Meanwhile, the number of new agreements came to 2,802, which was 48 per cent higher than the same month last year. 

Quarterly and 12-month increases in business were also recorded. 

The figures showed that in the three months to April 2022, the value of new business reached £385m, a 58 per cent rise on the same time last year while agreements came to 8,520, a 49 per cent uplift. 

For the 12 months to April, the value of new business rose 83 per cent to £1.28bn compared to the year to April 2021, and agreements surged by 72 per cent to 29,432. 

Fiona Hoyle (pictured), director of consumer and mortgage finance and inclusion at the FLA, said: “The second charge mortgage market reported another strong performance in April, with annual new business volumes only four per cent below the pre-pandemic peak. Of the total new agreements written in April, 53 per cent were for the consolidation of existing loans, 16 per cent for home improvements, and a further 25 per cent were for both loan consolidation and home improvement.” 

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

 

Growth for second charge market

Andrew Fisher, chief commercial officer at loan comparison site Freedom Finance, said that the current economic environment could create an opportunity for growth for second charge mortgage lenders. 

Fisher added: “The second charge mortgage market continues to show continued growth and we expect this to accelerate through the year as people look to capitalise on property equity following the boom in house prices through the pandemic. 

“This has enabled more homeowners to look towards second charge mortgages as a means of using the value of their property for other means. 

“As the cost of borrowing rises and household budgets are squeezed, debt consolidation is likely to be another major theme of the current inflation shock, and second charge mortgages can be a timely and favourable method of clearing or reducing existing debts.” 

Second charge business hits post-credit crunch high in March – FLA

Second charge business hits post-credit crunch high in March – FLA

 

Figures from the Finance and Leasing Association (FLA) showed that £139m in new business was completed during the month and 3,058 agreements were conducted. This represented annual increases of 53 per cent and 42 per cent respectively. 

Fiona Hoyle (pictured), director of consumer and mortgage finance and inclusion at the FLA, said new business was at its highest level since September 2008, the year of the financial crisis. 

In the three months to March, the value of new second charge business amounted to £349m, a 59 per cent rise on the same period in 2021. A similar increase was seen in the number of new agreements which totalled 7,834 during the quarter, which was a 51 per cent jump. 

Hoyle added: “The market helps consumers in a variety of ways, including funding home improvements and by better management of their finances through loan consolidation. 

“As always, any customer worried about meeting payments should speak to their lender as soon as possible to find a solution.” 

Second charge lending hits £140m in April

Second charge lending hits £140m in April

 

However, Loan Warehouse’s secured loan index showed this was down by £15.1m on the £155.5m lent in March. 

There were 3,000 completions in April, a seven per cent decrease on the 3,237 completions in March. 

Loan Warehouse noted the 19 working days in April were fewer than the 23 in March which resulted in a nine per cent dip in overall volume. Despite this, the daily average lending amount in April rose compared to the previous month. 

Lending in 2022 has now passed half a billion and currently stands at £545,913. Loans Warehouse said lending was on track to surpass £2bn in a 12-month period for the first time since 2007. 

Average completion times were flat at 22 days, as was the average 21 year product term. The loan to value (LTV) split was also static, with 84 per cent of loans being below 85 per cent LTV. 

The use of second charge loans remained the same when compared to March with the majority being used for either consolidation or consolidation with home improvements. These accounted for 40 per cent of loans apiece. 

Matt Tristram (pictured), co-founder and director of Loans Warehouse, said: “As the increase in second charge lending continues, lenders are working hard to maintain service levels and our own experience has seen that most have now increased capacity as the record lending levels only look to continue. 

“Second charge loans are being more widely used. With record low rates and variety of products, they are clearly now at the forefront of more mortgage professionals’ minds than at any point in Loans Warehouse’s 16 years of trading.” 

Second charge lending hits record of £155m ‒ Loans Warehouse

Second charge lending hits record of £155m ‒ Loans Warehouse

The March figure is up by 12.36 per cent on February’s total, and 12.83 per cent on the previous post-credit crunch record.

The number of second charge loans was also at a record high, at 3,237. This comfortably surpassed the previous record of 3,036m set in November 2021.

Lending across the quarter as a whole is also markedly up. The index found that lending for the three months was up by 82.62 per cent on the same period of 2021. Loans Warehouse noted that it took until June last year to reach the same level of lending seen in just the first three months of 2022.

Almost 40 per cent of the second charge loans taken out in February were for debt consolidation alone, while a little over 37 per cent were for consolidation and home improvement purposes.

The secured loan index follows industry figures released earlier this month by the Finance & Leasing Association, which suggested that the value of lending in February was up by 70 per cent year-on-year, while the number of agreements rose 59 per cent over the same period.

Fiona Hoyle, director of consumer & mortgage finance and inclusion at the FLA, noted this was the highest level of new business volumes for two years, with the market returning “to pre-pandemic levels of new business by both value and volume”.

February second charge lending doubles in 2022 to £138m – Loans Warehouse

February second charge lending doubles in 2022 to £138m – Loans Warehouse

 

In February there were £138m in second charge loans up from £70m in the same month of 2021, according to Loans Warehouse. It is also up from around £111m in January this year.

The report added that the number of loans written had remained roughly stable at around 2,500 for both December and January, but had risen by 19 per cent to 2,976 in February compared to January.

The average loan size has increased to £46,522 in February, which is up from £44,674 in January.

Loan terms also increased over the month to an average 21.5 years in February from 15 years in January.

Loans Warehouse said this could be a sign that consumers are trying to keep payments down as the cost of loving rises.

Around 40 per cent of loans were for consolidation, and roughly 40 per cent was for consolidation and home improvements. Nearly 15 per cent of loans were for home improvements.

The report added that nearly 85 per cent of loans in February were below 85 per cent loan to value (LTV) and 15 per cent was above 85 per cent LTV. It said that this could be due to second charge lending offering an alternative method of raising capital due to pandemic restricting the amount of equity borrowers could access.

Second charge lenders reported their figures directly to Loans Warehouse.

Separate figures from the Finance and Leasing Association (FLA) recently showed new second charge loan agreements grew by 57 per cent in January to 2,116, which is a sign of “continued recovery” for the market.

In the three months to January there had been 6,874 new second charge mortgage agreements and in the 12 months up to January there were 26,642 new second charge mortgage agreements, according to the FLA.

Second charge business shows ‘continued recovery’ in January ‒ FLA

Second charge business shows ‘continued recovery’ in January ‒ FLA

According to figures from the Finance and Leasing Association (FLA), there were 2,116 new second charge mortgage agreements in January, which is 57 per cent up on the same period last year.

The report added that in the three months to January there had been 6,874 new second charge mortgage agreements and in the 12 months up to January there were 26,642 new second charge mortgage agreements.

The value of the new second charge mortgage business in January came to £91m, which is 56 per cent more than the same period last year.

In the three months to January the value of new second charge mortgage business was £305m, which was up 52 per cent from last year.

The report added that in the 12 months to January 2022 the value of new second charge mortgage business amounted to £1.14bn, up 62 per cent on the previous year.

Fiona Hoyle (pictured), FLA’s director of consumer and mortgage finance and inclusion, said: “The second charge mortgage market continued its recovery in January with further strong growth in new business volumes.

“This market helps consumers in a variety of ways, including home improvements, and will continue to do so as households face increasing pressure on disposable incomes over the coming months.”

Pepper completes £350m second charge securitisation

Pepper completes £350m second charge securitisation

The transaction, originated by Optimum Credit, is the firm’s largest second charge issuance to date.

The securitisation, which the firm said received strong demand, is the lender’s fifth issuance in its secured loan series of transactions called the Castell programme.

Pepper bought Optimum Credit in 2018 from Patron Capital. At the time of purchase, the Cardiff-based second charge firm had a loan book valued at more than £450m.

Pepper is anticipating a rise in demand for second charge borrowing next year. The lender said this year’s second charge business was dominated by borrowers who wanted to consolidate their debts, a trend that is expected to increase if interest rates rise making short-term unsecured borrowing more expensive.

Laurence Morey (pictured), chief executive at Pepper Money, said: “The demand for this securitisation reflects the strength of the underlying loan book and the quality assets we are able to generate through our second charge platform. We expect customer demand for second charge mortgages to grow next year as we continue to develop our product range to meet the changing needs of our customers.”

Treasurer Matthew Blake added: “We received strong investor appetite for the securitisation which was executed as part of a refinancing of the funding platform during 2021. We will seek further funding diversification during 2022.”

Brilliant Solutions and MCI add specialist support to panels

Brilliant Solutions and MCI add specialist support to panels

 

Brilliant Solutions has added Gatehouse bank to its panel to increase the range of buy-to-let deals brokers have access to.

Gatehouse Bank is a Shariah-compliant finance provider that serves UK residents, expats and international customers.

The bank offers two-year and five-year fixed rate products in the buy-to-let market for single residency investments and portfolios up to £5m, along with multi-unit freehold blocks and houses in multiple occupation.

Paul Stockwell, chief commercial officer at Gatehouse Bank, said: “We are seeing increased demand for our products from within and outside the Muslim community, and so we are delighted to be working with Brilliant Solutions to make our offering available to its club members.”

 

MCI Mortgage Club

MCI Mortgage Club has teamed up with Fluent Money to offer its members a secured loan referral service.

This is the first time the club has worked with the second charge market, and through the partnership, brokers will be able to access all second charge lenders in the market.

MCI members will be able to contact Fluent’s partner development team and marketing department and will have their own dedicated account manager.

Melanie Spencer, head of MCI Mortgage Club, said: “I personally believe there will be a greater demand for secured loans going forward, especially if people’s circumstances have changed because of the impact of Covid.

“A secured loan can often be a better option than remortgaging or taking a further advance on the first mortgage.”

 

Second charges shunned by three-quarters of brokers – Brightstar

Second charges shunned by three-quarters of brokers – Brightstar

 

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.

 

West One relaunches second charge and BTL ranges with criteria changes

West One relaunches second charge and BTL ranges with criteria changes

 

Loans of £250,000 will be accepted up to 75 per cent loan to value (LTV).

The lender will accept applications from furloughed employees who are going back to work on the same salary and hours as they were contracted before the pandemic, at up to 65 per cent LTV.

Borrowers who have taken payment holidays but are no longer freezing payments will also be considered.

At the same time, West One has improved its self-employed criteria by reducing its minimum time trading from three years to two years.

 

Buy-to-let

The lender has also opened-up its overall buy-to-let range. The range is available to landlords who have taken a payment holiday as long as normal payments have resumed and at least two payments have now been made.

Its maximum buy-to-let LTV has been increased from 70 per cent to 75 per cent LTV.

The maximum loan size has been raised from £750,000 to £1m.

All rates have been reduced by up to 65 basis points and now start at 3.59 per cent for standard product residential deals and 3.79 per cent on specialist products.

West One’s standard and specialist buy-to-let products are available to first-time and experienced landlords, where the applicant owns their own residential property.

Marie Grundy, sales director for West One (pictured), said: “These major enhancements to both our second charge residential and buy-to-let product ranges represent our most significant set of changes since the onset of lockdown.

“They also underline our commitment to the second-charge market at a time when products are in shorter supply.”

Specialist lenders have begun to re-enter the market as funders grow in confidence.

Last week, Fleet Mortgages cut rates across its standard, limited company and houses of multiple occupation (HMO) ranges after getting the green light from its financial backers.

Meanwhile, Foundation Home Loans has raised £350m in its latest securitisation deal.

The lender now has more than £1bn in warehouse funding in place to cover its lending targets over the next 12 months.