Indeed, you might go as far as to say that for residential mortgages and the UK housing market we may have too much data. They do all tend to follow a similar theme, and you can see the direction of travel, but how often have we seen major divergences with one set of data based on the same fundamentals contradicting the other. Don’t get me started on house price data because, while we all enjoy looking at where they are heading, the differing indices and the methodologies they use can sometimes bring up wildly different results.
In a sense, the first-charge market is rather spoilt when it comes to statistics and data. Indeed, even other niche sectors such as buy-to-let – which is now comprehensively covered by the Council of Mortgage Lenders (let’s hope this remains the case when it merges into the ‘super’ trade body) – and equity release (covered off incredibly well by the Equity Release Council) have a rich amount of information to draw from.
As a stakeholder within the second-charge market, up until now we could only dream of being so spoilt when it came to dissecting our own market statistics, and gaining an industry-wide perspective on the growth of our sector. Even now there is a certain amount of doubt about the veracity of some of the statistics we get, and one of the major positives of the move to FCA regulation will no doubt be (at some point in the future) a comprehensive data-set which encompasses all lending activity.
Until then, we can draw upon one source whose results appear to show real positive intent when it comes to second-charge mortgage activity. This comes from the trade association, the Finance & Leasing Association, and is comprised of data provided by its second-charge lender members.
It’s most recent statistics for February reveal that second-charge lending hit £81m during the month, 40% up by value on the same month in 2015, and 17% up by volume - the fifth consecutive month of double-digit volume growth. The figures across the December to February three-month period show a similar level of growth with lending hitting £233m, up 40% on the year previously. Finally, this took lending levels for the past 12 months to £887m, which was 36% up on the 12-month period before that.
Now, some in the sector might suggest (perhaps rightly) that this underestimates the true volume and value of second-charge business being carried out across the UK. However, assuming the veracity of the statistics supplied by the FLA’s members, it does give us a good benchmark to work on, and rather importantly it does show (as far as we’re concerned) second-charge mortgage activity going in the right direction.
The big question however is what happens next? Because, while February’s figures are interesting, and March’s will be a bit of a misnomer as it will include the run-off of consumer credit pipeline, the real notable month of lending that should give us a handle on the ‘new world’ will come in April. Even then, especially with first-charge advisers still (in many cases) working out their route to the second-charge market, we may perhaps need to keep our powder dry until a little later in the year when we see figures for May/June/July, etc.
There were many pre-MCD predictions being made about the increases in second-charge activity we could expect once the regulations kicked in with many more first-charge advisers actively considering the product. However, until we see the ‘real life’ figures for the sector we are not going to get a true handle on whether second-charge is making those kinds of leaps and bounds.
From our perspective, adviser interest in our proposition even before MCD implementation has been significant, and there is cause for a cautious celebration that we appear to have got our offering right in that regard. However, from a wider industry perspective let’s perhaps wait until we see the first meaningful stats of the new regime before we get too ahead of ourselves – the job of education and the provision of information should not stop and there is still much to do to continue to get the second-charge message across.
