Second charge lending shows 'sustained growth' with 10% annual rise

Second charge lending shows 'sustained growth' with 10% annual rise
While we may see a few bumps in the road as Brexit negotiations stumble along, the strength shown gives us real optimism that this upward trend will continue.

The second charge market is showing sustained growth with seven consecutive months of increased annualised lending which totalled £979m for the year to September 2017, up 10% on the same time last year, according to Enterprise Finance data.

It found that despite a period of ongoing political and economic uncertainty, an increasing number of consumers and investors are turning to second charge mortgages, driving the market close to £1bn a year.

Alongside this, second charge mortgage new business has consistently increased by both value and volume. Annualised numbers of cases advanced 9% from just over 19,000 in March 2017 to almost 21,000 by September, while the equivalent average loan size increased 3% to almost £47,000.


The Enterprise Finance data mirrors that of the FLA, which found that September was a notably quieter month by the standards of 2017, equal to September 2016.

The FLA data shows that new business volumes fell by 2% in September following six consecutive months of growth.

However Enterprise says that as a single month, "it is too early to suggest a reversal of the strongly positive trend seen throughout 2017".

Harry Landy, Managing Director of Enterprise Finance, commented: “The second charge market has gone from strength to strength, shown by eight consecutive months of growth. The sector has shown resilience amid ongoing political and economic uncertainty, at a time when confidence in the property sector as a whole seems to be gradually declining.

“While we may see a few bumps in the road as Brexit negotiations stumble along, the strength shown gives us real optimism that this upward trend will continue. An increasing number of consumers are taking out second charge mortgages, and of higher value, whether it’s to fund renovations, help a family member with a deposit, or consolidate household debts.

“Moreover, we’re finally seeing brokers being more confident with the range of second charge products out there, and advise their clients accordingly. What’s important now is that brokers continue to grow this confidence, as fully understanding the role second charge mortgages can play for their clients, and the benefits they can have, will help to unlock further growth for the market.”

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