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

63% of finance professionals against mainstream banks entering seconds market


A number of players in the second charge mortgage market have debated whether there is room for high street banks to enter the sector.

This follows a poll conducted by Loan Talk which found that 62.5% of finance professionals did not believe mainstream banks needed to enter the second charge mortgage market. 

The remaining 37.5% were in favour of mainstream banks stepping in to the specialist environment. 


Rob Derry, managing director of Brunel Mortgages and Loans, felt that if mainstream banks thought they could make a good return out of seconds, they would have already had products by now. 

“They need to do what’s best for their business model. 

“Specialist lending is probably best left to the specialists – after all, that’s why the likes of Shawbrook, Together, Prestige, Optimum, Masthaven etc all exist.”

Jon Sturgess, head of sales for secured lending at Masthaven, added: “I believe the second charge market is already well served by great brokers and lenders who truly understand the needs of customers and the diversity of their requirements, so no I don't think mainstream banks need to enter the second charge market.”

Is the industry wrong? 

However, Martin Stewart, director at London Money, disagreed with the results.

“I think the industry is wrong and blinkered – quelle surprise.

“The reason why the market isn’t growing as fast as it should is because there is still a large gap between the first and second charge proposition, which needs to be narrowed.

“A mortgage broker can relate to the high street bank and it’s a relationship they have had for a long time. 

“There is a trust there that is not yet prevalent in the second charge arena.”

Martin said he would welcome high street lenders into seconds with open arms – as long as they listened to the market first and got feedback from brokers about what they want to see.

“The Bank of England announced new affordability rules [on Wednesday] which could put a huge squeeze on first charge lending. 

“Given that the banks are sat on warehouses full of cash, it makes perfect sense for them to look at new product areas. 

“It will need this to happen to wake us all up from the comfy sleepover we’ve been having since MCD.

“We are already challenging the current second lenders on new products based on what our mortgage brokers want to see in the industry [and] we are hopeful of a game-changing exclusive at some point in the not too distance future.”

What impact could mainstream banks have on the market? 

“I worry that customers with complex needs simply won’t meet their criteria, which could lead to them becoming disenfranchised with the market, which won’t help anyone,” said Jon. 

However, Rob felt the move could force existing seconds lenders to become more innovative. 

“I think if they did enter the market, they would just pick off the super-prime customers, which would mean that the existing crop of lenders may have to innovate even more than they do currently to retain their volumes. 

“However, with published rates starting as low as 3.73%, it’s difficult to see how much lower the mainstream banks could take that in order to attract significant, profitable volume to make it worth the investment.”


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