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

Second charge lenders could ‘steal a share of business’ from remortgage market

Second charge lenders could ‘steal a share of business’ from remortgage market

The second charge industry will be able to gain some of the remortgage market’s share of business after the Mortgage Credit Directive (MCD) comes into force, according to broker Enterprise Finance.

Earlier this week, research from LMS revealed that equity withdrawn through remortgaging was up 32% to £837m last month, compared to the previous year.

However, Harry Landy, Sales Director at Enterprise Finance, expects the second charge sector to challenge the remortgage market, which he says will only benefit borrowers.

He told Loan Talk: “After the implementation of the MCD, we should see an uplift in demand for secured loans.

“Once the regulation is in place, more borrowers will view secured loans as a viable alternative to remortgaging.

“This will allow secured lenders to steal a share of business that would have previously been taken by the remortgage market.

“The increased borrowing options for consumers will only be beneficial, as they have more chance of finding the right loan to suit their needs,” Harry added.

The Enterprise Secured Loans Index showed that the second charge industry saw a rapid expansion during 2015, with monthly lending exceeding £90m between August and October.

Roger Morris, Director of Sales at Precise Mortgages, told Loan Talk that it will be soon become more difficult to compare the size of the second charge industry with the remortgaging market because product transfers will no longer be recorded by the Council of Mortgage Lenders.

However, he does think that the regulator is keen to see the second charge market grow and MCD will help it, so long as brokers are properly educated.

Roger said: “Regulation is a sword for those that do things right to defeat those that fail the consumer.

“MCD will drive out those that should not be here and will drive volumes to those that do the job right.”

“The regulator wants the seconds market to grow [and], what it has done and the changes it has put in place will, and can only escalate the second charge market. 

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