A great year in 2013 but can 2014 be a match or go one better? I believe that the market cannot simply go on growing exponentially without a corresponding increase in the number of borrowers but there is still plenty of steam left.
2014 will help to confirm second charge as a real alternative lending source for brokers and their clients. Eye wateringly good products and pricing, transparent criteria and new lenders jockeying for attention provide intermediaries with the widest and brightest lending palette from which to choose medium term borrowing options.
However, going back to my earlier point about new borrowers, the sector is still finding its feet and one of the factors behind the growth we saw last year owed much to the restrictions on remortgaging due to the withdrawal of interest only.
However, the normal refinancing of loans from one lender to the other is not going to help us grow as an industry. Of course, it is adding to the numbers, but having second charge loans being used to swap debt from one lender to another, like people use credit cards to move outstanding balances between card providers is just a type of churning, which could have longer term consequences for both client and lender.
I am excited for the future however, when I see new products like the latest addition to Masthaven’s range, which challenges the notion that products must conform to a rigid pattern. The new product, which is in effect, a second charge loan short term hybrid, brings together elements from our market and mixes in DNA from the bridging sector.
This kind of innovation will help us all look at where particular products can be of benefit to a new generation of customers, using non first charge funding for their specific borrowing needs.
Bradley Moore is head of second charge loans at Brightstar Financial