Poll
55% of professionals predict second charge market to surpass £1bn mark in 2017
A recent poll conducted by Loan Talk found that 55% of financial professionals expected the second charge mortgage market to exceed the £1bn mark in 2017, while 45% felt it would remain below that figure.
The results follow recent figures released by the Finance & Leasing Association (FLA) which revealed that for the 12 months to January 2017, new business in the second charge mortgage market fell by 6% to £869m.
Meanwhile, the latest second charge lending report from Enterprise Finance reported that the market only grew by 4% year-on-year in December.
Sam Kirtikar, managing director of Clever Lending, felt that 2016 was a year of transition and the “boom” following the introduction of Mortgage Credit Directive (MCD) regulation was perhaps a bit of a myth.
“There is a lot more hard work to be done and a huge amount of education is still required to bring the second charge product to the forefront for brokers and consumers to see the benefits alongside the mortgage.
"The quality of underwriting and lending has certainly improved, illustrating more meaningful discussions are taking place with customers and the quality of the applications [has] increased with better-trained underwriters.
“The sustained period of low interest rates does encourage the use of second charges over remortgages and suitable and sustainable products are being identified.”
Martin Stewart, director at London Money, felt the industry had failed to take the initiative that MCD offered.
“I meet many brokers that individually write £100m of mortgages every year and yet here we are talking about a whole industry struggling to reach £1bn.
“I see lots of vested interests talking [about] their book, but I don’t see anyone endeavouring to pick up this young whelp of an industry to help drive it forward into a new era.”
Gaining trust and educating brokers
It is clear that more work needs to be done to attract brokers to the second charge market.
“We need to stop pointing fingers and start holding hands and come up with a cohesive, well thought through, 10-point marketing plan to get the broker engaged.
“A second charge should never be seen as a transactional arrangement, more a fundamental tool that the broker can use to help their client financially plan.
“Understand the broker and you’ll understand the rest.”
Rob Derry, managing director of Brunel Mortgages & Loans, added: “Aside from the overall economic situation, which is almost impossible to predict, the biggest issue is advisers being aware of seconds, when to use them, how to access them and the dangers of simply saying ‘I don’t do seconds’ and ignoring them.
“We’ve all got a part to play in that without making that education sound like nothing but a marketing message.”
Scott Thorpe, director at Access 4 Finance, felt the £1bn mark would be passed in 2017, but hoped to see even bigger traction in 2018.
“2017 is still about sowing the seeds, gaining trust and, above all, educating brokers on the products available so they have them in their tool box to use when applicable, which could be one to 10 applications or one to 100.
“I [think] the only way sustainable and large growth will occur is when we deal with our first charge world peers, find out what they need and want from our industry, take note, then try to develop products which will help grow their business.
“This isn’t about the master broker or packager.
“This is about the person advising on the product: the mortgage broker.
“Once we [understand that] it’s all about the broker, then we will crack it and growth will occur.”
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