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Do you expect to see less or more second charge mortgage lenders in 2018?

London Money: One year on

Martin Stewart

This month sees the first anniversary of us launching London Money Loans on to an unsuspecting broker community.

A lot has happened since then, Brexit and Trump to name but two. So I thought this month’s column would be a good time to take stock of the past 12 months, while pondering what may lie ahead.

I recall there was a great degree of optimism this time last year. The Mortgage Credit Directive had arrived, the second charge industry had found itself a new regulator in the FCA and the broker – for the first time ever – was now forced to give due consideration to a second charge mortgage if they wished to maintain their ‘independent’ title.

Why then – with those great foundations in place – does it feel like that initial enthusiasm has fizzled out like a cheap firework on a miserable November night? The answer, I believe, is that the industry has completely failed to understand the psyche of the mortgage broker and has continued to make the same old mistakes. 

I speak to many brokers and clients every day; helping brokers package up their seconds and advising clients when they should be doing a second charge mortgage. I share an office with 20 brokers and do the same job as them, I have lunch with brokers, I present to brokers, I socialise with them and confidently call many brokers good friends of mine. I believe in working collaboratively, not as a competitor.

One of the brokers we work with took me out to lunch to thank me for, and I quote: “Opening my eyes to the opportunity.” How did we do that? By engaging with him on a very personal level. We told him – and showed him – the mistakes we had made and added value to him in a way that only a fellow broker can.

We will make a profit this year – from a standing start – in an unfamiliar and highly competitive environment. That tells me that our collaborative approach is the correct one. 

So, dear reader, what does the future hold for us all? Well, a warning, if I may. The first charge industry has evolved greatly since the credit crunch; it had to. To date, while I have seen improvement in seconds, I have not seen the wholesale and aggressive changes that are needed for the industry to grow. If you want that to happen – and get 10,000 brokers chomping at the bit – then the gap between first and second products needs to close dramatically. The headwinds to that include apathy, the dangerous assumption that because we’ve always done it a certain way that’s the best way going forward, and the simple fact that there is no set industry agenda or road map to help guide us all on that journey. 

For those that read this column, I strongly advise you to tune in next month. We have been working hard behind the scenes to try to change the music on the industry jukebox. We’ve grown a little tired of hearing “Puppet on a String” permanently on a loop. For a change – and if I am being honest – a lot of us quite fancy listening to “I Want to Break Free”.

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