COMMENT
Second charge market boost
Rising interest rates and mortgage costs are leading to the growth in second charge mortgag- es, providing a new oppor- tunity for lenders. New figures show an increase in second charge mortgages, as home- owners look to capitalise on property equity without having to remortgage to more expensive deals, which comes as a result of the Bank of England’s base rate increases. According to the Finance and Leasing Association (FLA) , the value of new second charge business totalled £127m in April, a 54% increase com - pared to the same time last year, and new agreements came to 8,520, a 49% uplift. In addition, house price increases have allowed prime and debt consoli- dation borrowers to secure higher loan amounts than was previously possible. The boost to the second charge market provides the opportunity for growth for specialist mortgage lenders, such as Evolution Money, a leader in secured loans. The lender reported a rise of second charge lending between March and May, with prime borrowers making up 31% of its second charge lending, up from 27% in the previous quarter. Evolution Money echoed the idea that the rise could be due to rising first-
charge mortgage product pricing meaning existing borrowers no longer want to remortgage onto poorer deals to release equity for funding specific things such as home improvements or paying off other more expensive debt. Steve Brilus, chief executive of Evo- lution Money, said: “This has already been a very strong start to 2022 for the second charge market and given the likely direction of travel for interest rates in the first charge space through the rest of the year, we fully anticipate
that both advisers and consumers will continue to see the value available in a second-charge mortgage” Andrew Fisher, Chief Commer- cial Officer at loan comparison site Freedom Finance, agreed, saying: “The second charge mortgage market con- tinues 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. “
16 | Metrics Monthly
Q2 | 2022
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