"I’m not so sure there is a set ‘typical’ borrower when it comes to seconds, but there are certainly some common themes in terms of what second charge customers use the money for."
FR: Second charge mortgages are often in the news in terms of take-up and whether the industry is seeing growth. Where do you see the sector at the moment and what can it achieve in the rest of 2021 and beyond?
I think the sector is in a strong position. Second charge has always been a resilient sector. The stamp duty initiative has overcooked the first charge market but that will level out when the holiday expires leaving more opportunity for seconds. There are a lot of people trapped in mortgages and the need for debt consolidation will be strong so I think the second charge sector is in a great place to provide a solution to consumers post-Covid-19.
FR: You recently launched the Evolution Money second charge tracker – what does this outline in terms of ‘typical’ borrowers and how they’re intending to utilise second charge mortgages?
I’m not so sure there is a set ‘typical’ borrower when it comes to seconds, but there are certainly some common themes in terms of what second charge customers use the money for. That said, we split our borrowers into debt consolidation and prime groupings. The former tend to come with differing degrees of background debt/arrears, etc, and are specifically looking at a second charge to pay off this debt, be it from another financial provider or, for example, car finance and the like.
The prime borrowers, as the name suggests, don’t have those adverse credit issues and we are seeing a growing number of customers fitting this bill. They might be unable, or unwilling, to remortgage their first charge but still want to access the equity they have built up, and again while they are using the second charge to pay off debts, they’re also likely to be using it for home improvements etc.
FR: As we come out of lockdown, where do you think the pinch-points will come for many people’s finances? Does that indicate there is likely to be a greater take-up of second charge mortgages?
Undoubtedly, the pandemic has had a significant impact and influence on the finances of many people, and they may have needed to take payment holidays as a result, or seen incomes temporarily fall, or been on furlough, or had to change jobs. The fallout is likely to be with us for many years to come and could fundamentally change the financial position of many existing homeowners.
I suspect, as noted, we’ll be seeing a large number of second charge customers utilising the product in order to consolidate debts they might have built up over the last year. Plus, it will be interesting to see how first charge lenders ultimately view the credit-worthiness of those who did take holidays. We all know these are not supposed to show up on credit reports, but I’m confident that lenders are taking these into account when making their lending decisions. We think we’ll see a new band of ‘mortgage prisoners’ as a result and I think they’ll be increasingly looking at second charge products as a means to an end before their able to remortgage their first charge product.
FR: What career path has brought you to Evolution Money? What excites you about this sector at the moment?
I have been in finance for over 20 years starting as a financial adviser selling investments and pensions with Friends Provident. My introduction to the intermediary world was through introducing the Virgin One Account into the market. That’s when I realised what a great market it was and that it was full of really great people. Those relationships are still strong today. The mortgage market is a small world but it’s a great world.
The growing use of technology is the exciting part of what we do. The industry is adopting great consumer-centric tech solutions. Finance is an old industry with set paradigms and stayed consumer behaviors. It is our responsibility to protect the consumer and also take them on the journey with us, educating them and bringing them into a tech-savvy finance world. I feel we can create products that truly mirror the needs of the generations to come.
FR: How have you found lockdown? Has there been anything specific that you could not have done without?
I’ve found lockdown hard if I’m honest. I’m a social creature and that lack of interaction with friends and family has been extremely difficult. I introduced a puppy into the family just before the first lockdown, the disciplined routine around the new arrival really saved my mind. I always thought I hated routine but even a small amount is vital to keeping the mind fit and well. I must admit on top of all of that I have missed a cold pint (or three) in a pub.
FR: What do you see yourself doing next?
There’s still loads to achieve with Evolution Money. Lots of great plans and initiatives to grow and expand the market. The finance market is my home. I can’t see myself moving away from it anytime soon - I would miss the people. Plus, I should have studied harder at school.
