Are Secured Loans gaining Popularity?

Recent figures have seen consistent growth in the secured loan market.

The recent figures from the FLA indicate that in October business volumes in the second charge market grew by 43% compared to October 2020, which means that for the last 3 months, the sector has seen continuous growth. The statistics show that lending has averaged at £100m over this time frame, which is a promising sign that the industry is not only recovering from the pandemic, but actually gaining the recognition it deserves.

Since the introduction of MCD in 2016, it has felt like a battle for many to try and get brokers to consider second charges as a legitimate alternative to remortgages and further advances, but the growth in the sector could indicate that, finally, a change is happening.

It could be that the recent surge in house prices is forcing consumers to reassess what they want from their living situation, or they have been priced out of moving up the property ladder, so are taking on considerable home improvements, such as an extension, loft conversion, or a new kitchen and bathroom, as due to supply and demand, the chance of securing a desirable house in the current market is dwindling. From what we’ve seen from cases we’re receiving from brokers and others in the industry, is that possibly we’re seeing a change in the attitude towards second charges; advisers are re-evaluating remortgages as the only viable option for raising additional finance.

We have been championing second charges for years and have long seen the value in these as a genuine way of raising finance for customers from all walks of life and not just those who have adverse credit histories. It has historically also been thought that second charge lenders charge higher rates, which may have been true in the past, but our second charge lending panel has rates starting from 2.99%, which rivals some mainstream lenders on the market. Hopefully, this recent growth is going to continue on the same trajectory, and we will continue to see confidence grow in second charge products, and they start to be considered in a more mainstream arena.