There in an industry belief that the second-charge mortgage market will grow over the next 12-18 months, especially if Bank Base Rate (BBR) is increased during that time.
That was the view of a number of panel members discussing the second-charge mortgage market at the Financial Services Expo (FSE) Manchester on Wednesday.
Adrian Moloney at OneSavings Bank suggested the current value of second-charge mortgage lending was £880 million per year, however argued that the recent introduction of the Mortgage Credit Directive (MCD), a drop in fee charges, plus advances in technology would provide an increase in adviser activity and increase lending levels.
Predictions from panel members for lending activity during 2016 and 2017 suggested that the £1bn barrier would be breached this year and that any increase in BBR would provide a real boost.
Rob Jupp of Brightstar said: “If the base rate stays the same then I expect lending levels to trickle upwards. However, if we do see an increase in BBR then seconds become much more attractive. People will be mobilised to remortgage and seconds will be an option. In 2016 I think it could be £1bn, in 2017 it could be nearer £1.25bn but £1.5bn with an increase in BBR.”
Roger Morris of Precise agreed with Jupp’s predictions suggesting £1.3bn in lending was achievable in 2017 and pointing out that buy-to-let second charges could increase considerably as landlords looked to release equity from their portfolios.
The panel also discussed the growing number of second-charge lenders who are offering advisers the ability to deal with them direct, rather than go through a master broker/packager. Precise Mortgages have recently launched this option to market and Morris defended the decision.
He said: “When I was a broker I liked choice and it’s important to choose what you value for yourself. We are now offering two options – come direct to us or use a master broker. I’ve found in the past that when you force advises to use a master broker, then they often rebel against this, and since our launch, we’ve actually seen an increase in the amount of business going through master brokers.”
Jupp agreed that forcing advisers to go down a particular path was often not the best option, however argued that “choice is only good if it’s true choice”.