Second charge loans are no longer a last resort for borrowers, following new products being brought in by competitive lenders and new challenger banks that offer a solution to a wide range of complex financial circumstances.

Following the recently published Finance & Leasing Association statistics which showed that second charge mortgage repossessions in the third quarter were down nearly 50% compared to the same period last year, the industry debated the reasons behind the major drop.

Bradley Moore, Director of Second Charge Loans at Brightstar, thinks the figures are an indication of the sector’s progression.

He told Loan Talk: “The sector has come a very long way collectively to ensure that customers are fully aware and understand all aspects of the loan they are taking, over not just recent months but over recent years.

“This is, of course, helped by much more competitive and flexible options that are meeting the client’s actual requirements rather than being a loan of last resort which may have been the case in years gone by.”

Alison Houghton-Corfield, Intermediary Sales and Business Manager at Freedom Finance, echoed these thoughts adding that the introduction of new products has made second charge loans more accessible to borrowers in financial difficulties.

She told Loan Talk: “These figures highlight the fact that the specialist lending industry is heading in a positive direction, with brokers and lenders working closely together to provide products that address a wide range of complex financial circumstances.

“Challenger banks have entered the arena and brought with them fresh underwriting criteria. For example, new products have been developed for victims of circumstance, which not only include those struggling with debt, but also those who have experienced unforeseen and life-changing events such as divorce or redundancy.”

However, the improved repossession statistics are not just a result of changes within the second charge industry.

Harry Landy, Sales Director of Enterprise Finance, believes the current economic climate is helping borrowers to stay on top of their finances.

“Across both first and second charge mortgages, another factor helping repossession levels fall so low is the recovering economy which has resulted in a stronger jobs market than in the aftermath of the recession.

“Low interest rates have also made repayments more manageable, but borrowers should bear in mind that they won’t always be as low as they are now, and should plan ahead for future rate rises.”