Poll
Second charge market predicted to hit £1 billion mark by 2016
The Lending Wizard has predicted that the second charge market will hit the £1 billion milestone by 2016.
According to projections from loan sourcing tool, The Lending Wizard, current changes in the second charge loans market will eventually result in the market more than doubling in size within the next three years.
The predictions are based on historically high growth since 2011, improved awareness of the consumer credit industry following regulation by the FCA over this sector and the upcoming implementation of the European Mortgage Credit Directive.
Data has shown that the secured loans sector has averaged 130 per cent growth over the past three years, even before recent changes were made. A recent poll by The Lending Wizard at the Financial Services Expo however, showed that 73 per cent of intermediaries who responded have been feeling more confident about recommending secured loans since the FCA took over.
Commenting on the predictions, Gareth Broome, Senior Business Development Manager at The Lending Wizard, said: “In the past, secured loans were often seen as a fall-back product, and something outside the comfort zone of many brokers. Over the past few years however, this has started to improve.
“The changes under the FCA have had the dual effects of positioning secured loans as a mainstream lending product and tasking brokers with the explicit requirement to carefully review all the options in order to be certain of offering the best advice. For example, a secured loan could well be a suitable alternative for people who are unwilling to disrupt a great deal already in place on their current mortgage.”
“We expect the European Mortgage Credit Directive to accelerate the changes we’re already seeing, encouraging
intermediaries to make a considered appraisal of the alternative options available to them and ensuring that second charge loans are one of those options,” he said.
“Taking into account these advances and the already promising trend of growth, it’s realistic to imagine the sector
breaking the £1 billion mark in two years time.”
Under the European Mortgage Credit Directive, second charge loans will be brought in line with mortgages in terms of regulation, qualification requirements for second charge firms including intermediaries and increased flexibility in
product design for lenders. All of these changes will help push the second charge market into the spotlight, whilst
improving its credibility and range of applications.
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