The second charge mortgage market saw a rise in volume and value in May – making it the third consecutive month of growth, according to the Finance and Leasing Association.
The value of the second charge market was £87 million in May, up 26% on the previous year.
There were 1,851 new second charge mortgages taken out in May, a rise of 29% on the previous year.
Second charge mortgages allow you to borrow a lump sum which you repay alongside your existing mortgage over a fixed term. Many people use them to raise money as an alternative to a remortgage.
Fiona Hoyle, head of consumer and mortgage finance at the FLA, said: “Second charge mortgage new business has ebbed and flowed over the past year, which was to be expected following the significant changes brought about by the market’s transfer into MCOB in March 2016.
“Customers are borrowing for a wide range of reasons, including renovating or extending their property.”
The value of second charge business was £917 million in the year to May.
In the year to May 20,016 new agreements were taken out, 2% down on the previous year.
Harry Landy, managing director at Enterprise Finance, said: “Consumer confidence remained robust in May, and another consecutive month of increased lending is a positive indication that the second charge market is in good shape. Despite the ongoing political and economic uncertainty – a result of the snap general election and Brexit vote – it’s encouraging to see the market return to the levels seen before the Mortgage Credit Directive implementation.
“This three month trend of consecutive growth is also further indication that the Mortgage Credit Directive is finally having the positive effect on the market many thought it would have straight away. As a result of Mortgage Credit Directive and brokers needing to be aware of second charge mortgages, they are becoming more of a mainstream option to raise capital as many brokers and consumers realise the benefits. We are optimistic that the second half of 2017 will continue this upward trend.”
You can find out more about second charge mortgages here.
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