“Second Charge Lenders Still Have a Good Appetite” – David Beard of Lending Expert

A founder of one of the UK’s leading price comparison websites has highlighted the continued appetite of second charge lenders.

The year 2020 was certainly a turbulent year for the mortgage industry and all the businesses that come with, including surveyors, brokers, financial advisors, estate agents and lenders.

When the lockdown started in March and ran for around 3 months, the housing market was pretty much completely closed up. But once we entered the summer time, the market reopened with real enthusiasm, with both buyers and sellers looking to make up for lost time – resulting in a surge of mortgage applications and the largest increase in house prices in the last 10 years.

David Beard, founder of Lending Expert, explained:

“While business levels were quite significantly affected during the first national lockdown in March 2020, it’s now “business as usual” during this third lockdown for the secured loans industry.” 

“January 2021 is showing that many second charge lenders still have a good appetite to lend and borrowing rates and products have mostly remained unchanged. The key differences to note are during this third national lockdown is that the housing market has remained open and lenders are able to instruct surveyors for home valuations which is critical to successfully carry out secured lending and mortgage applications.”

“This time round there is no restriction on physical valuations and for over a decade the industry has offered a huge range of products available using Hometrack or similar desktop valuation models.”

 

What is Spurring on the Appetite in Second Charge Lenders?

Making up for lost time and trying to hit funding targets is driving the rediscovered appetite in second charge lenders and commercial mortgage lenders. Whilst we hope that the covid pandemic is improving and the number of cases are reducing in the UK, this is still not fully certain. So whilst the market remains open, brokers and lenders are motivated to complete deals where possible.

In addition, the government’s stamp duty deadline is fast approaching, coming to an end on 31st March 2021 – and this has offered a huge saving to buyers, homeowners and developers who can save as much as £15,000 on properties under £500,000. With the deadline less than 8 weeks away, there is a real motivation to complete on deals.

In terms of second charges, this allows homeowners to raise funds, perhaps for an additional property or to raise money for other purposes. The covid pandemic has highlighted the value of time and quality of life – and there is a continued interest in second charges whether borrowers are using the money to renovate their existing homes, adding gyms, cinemas or home offices – or perhaps buying a second property for investment or leisure purposes. There has certainly been an increased interest in properties in the countryside – and this could be a good reason to take out a second charge mortgage, whilst keeping your family home in a main city location.

We have a strong demand in Q1, but we do not know what this could mean for Q2 – whether the market remains strong or whether in fact, the housing market will yet again come to a standstill or house prices rise or fall dramatically.