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Lenders are responding to increased demand for second charges

Stewart Simpson, Second Charge Mortgage Specialist at Brightstar Financial

Even while many lenders pulled back their appetite for second charge lending during the pandemic, client demand remained strong and there have been two areas in particular that have increased the most – borrowing for home improvements and for debt consolidation.

In general, the trend we have seen is that the shock of the pandemic has encouraged many people to be more cautious with their money. So, even while the home moving market was booming, many clients decided to increase the footprint of their existing property rather than engage in the competitive market and the associated costs of moving. It’s definitely now the case that many people are seeing home improvements as a cost-effective way of progressing up the property ladder.

We’ve also seen many customers who have had to tighten their belts and live off of a reduced income for many months and this has jolted them into doing something to sort out their finances. Unsecured credit has been so easy to access for so long and many people have taken on big commitments. The pandemic has created a lot more urgency for people to lower their outgoings.

Whereas borrower appetite remained strong throughout the pandemic, lender appetite definitely dipped last year. However, we’re now seeing many lenders returning to the product ranges they offered before Covid and often the rates are now even better. It definitely feels like lenders want to lend at the moment.

The one potential hurdle will be the impact of government support schemes coming to an end and whether this has a notable effect on unemployment. However, the uncertainty around this will be short lived and I think we will know pretty quickly what effect this will have. It’s unlikely to change lender appetite overall, but it will make it harder for those clients whose finances suffer as a result.

However, while this may reduce demand amongst some potential customers, at the same time, we are now seeing client applying for second charge mortgages who were previously unable to access the market because they were on furlough or have had reduced income. This is likely to offset any reduction in demand caused by a potential increase in unemployment.

As we move into next year, I wouldn’t be surprised if we saw more lenders coming into the market, or broadening their proposition, to provide even more options for customers. The second charge mortgage market definitely continues to offer new opportunities to customers, to lenders and to brokers.


For more information on our second charge lending products please contact the team of experts at Brightstar on 01277 508951 or email helpdesk@brightstarhub.co.uk.


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