Are you ready for the consumer 'switch on' to second charges?

Figures released by the Finance and Lending Association for July of this year demonstrated a 6% year-on-year rise in new second charge business completions (to £98 million) and a 5% increase in new agreements (to 2,162), while data for August exhibited a similarly impressive trajectory, with 2,100 new agreements, representing a 6% rate of growth.

Overall new business for the twelve months to August has risen by 2% (to more than £1 billion in total) and by 3% on new agreements (to a staggering 22,356). Yet (as with so many so-called- specialist products) there is a lingering suspicion within the industry that significant numbers of brokers are failing to engage with the second charge market or prospective clients, with many observers asserting that sales would be considerably higher if brokers gave due consideration to individual circumstances or needs as opposed to merely viewing the product as an alternative to failed remortgaging options.

Interestingly, a recent survey conducted by SimplyBiz Mortgages discovered that 85% of mortgage intermediaries claim to have an on-going involvement with the secured loan market (with 60% indicating that they refer business and 25% that they write the business themselves), yet many experts have discounted the validity of these figures (particularly at a ‘grass roots’ level) and have questioned whether brokers are offering second charge loans on a consistent basis.

It's fair to say a large number of mortgage brokers are not making it clear that they can or do offer second charges to their customers. However, we are seeing a shift in consumer awareness thanks in no small part to the second charge industry itself. Providers and lenders are working to educate the public on the benefits of the product and the mainstream media has seen numerous articles on the sector published of late.

This means, while brokers aren’t ‘advertising’ second charge mortgages, consumers are catching on to their benefits and will undoubtedly start to ask about them. The questions brokers need to ask now is, will they be able to adequately cater to them?