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



More in and out than the hokey cokey

By Paul Woodworth, Managing Director of Gateway2Finance |


 My phone rang at 5.00am a week last Friday with the first panic-stricken friend informing me that the Leave campaign had won the referendum and we would be leaving the EU.

My phone rang at 5.00am a week last Friday with the first panic-stricken friend informing me that the Leave campaign had won the referendum and we would be leaving the EU. By the time I’d been to the gym and got into the office, I had around 20 missed calls, the pound had fallen through the floor, the stock market had crashed and the prime minister had resigned. In fact, one of David Cameron’s greatest achievements is probably putting in place a strategy for not serving Article 50 immediately, but giving his government and successor the opportunity to put together a coherent plan as to how we work through our divorce from EU membership.

The chancellor had stated before the referendum that to exit the EU would leave the UK with no economic plan (even though it’s his job to have one) and there would be an emergency budget to initiate increased austerity measures and increase taxes. It now seems that this will not be necessary and there will now be a reduction in corporation tax to 15% to show that the UK is ‘open for business’.

Now I’m no political guru, but it was looking like the country was in a bit of a crisis. Not because of the economic performance data, but more the behaviour of our so-called leaders. Some can be likened to Olympian-style rats breaking world-record times for jumping off their respective political sinking ships. Regardless of which ship they’re actually on and regardless of whether it’s sinking.   

Positive future for financial services

So where are we now? Stock market recovered, sterling is getting stronger (the currency not the footballer) and there are rumours that the Bank of England base rate is likely to fall.

As an industry, we should be looking positively into the future. Lower mortgage rates and reduced first mortgage LTVs is good news for both first and second charge mortgage providers.

Reduced Bank of England base rate and lower LTVs

Hopefully this will filter through to the first mortgage market and this will enhance the rate war further as borrowers look to secure a great mortgage deal, while interest rates are at what has to be their lowest ebb. This will also increase the amount customers can borrow even within existing affordability calculations.

This is not so good for savers, however, especially those who rely upon their pension for income. It is likely that there will be an increase in demand for equity release-type products to supplement their income. 

Any remortgage activity will, of course, increase the movement in the second charge mortgage arena as borrowers look to acquire the best deals at low LTVs.

It was reported in The Sunday Times that the Bank of England will look to reduce the amount of capital banks have to hold and suggested this is the clearest sign yet that we’re heading for a recession. 

You keep it positive

The bottom line here is that once the smoke begins to clear there will be a change in people’s financial circumstances. There will certainly be a great deal of activity and as always there will be winners and losers. Our role within the sector is to stick in there and provide advice and support to both. 

Attributed to Paul Woodworth, Managing Director of Gateway2Finance 



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