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AN EVOLVING SECTOR – REASONS TO BE MERRY

By Bradley Moore

Ok, so I may be biased being somebody whose day job is to run a business that operates in this space, but what an exciting sector second charge mortgages is. Having worked in the industry for almost twenty years now I can honestly say that I have never been so excited about the opportunities that this particular sector provides and I am not just talking about for me and my business, I mean for everyone, the lenders, our introducers and suppliers and of course the people focal to all of us, our customers.

Whether it’s in sport, life or business, the best way to react to being beaten down in the past is to bounce back, fitter and stronger, this can be said about second charge mortgages for so many reasons.

Yes, there will be challenges as we settle into a new regulatory regime and adapt to the changes but give credit where it is due, so much time and effort has been put in to make the process as fluid as it can be and in my opinion there has been more cohesion between brokers and lenders than ever before. Dare I go as far as to say, I feel some lessons could be learnt by the much bigger mainstream mortgage market.

The sector we see now is extremely competitive; rates are keener than ever, pricing has continued to reduce throughout 2015 as new entrants came to market and established lenders have jostled for position. In 2016 post MCD with continual education the number of brokers advising on second charges should grow exponentially.

Today we see a sector much more tightly managed than it once was, despite not operating in the sector during the dizzy heights of the noughties I am fully aware that the market was not blessed with a great reputation. Much has been done by the lenders and brokers alike to establish a much more transparent process for everyone and the MCD will take this a step further.

The sector is flexible, whether it is a broker looking to place a case with a lender or a customer looking to satisfy their requirements, nobody wants to be pigeon holed into taking a “closest fit” solution and now they do not need to.

With MCD looming and all the talk about the alignments of the markets, having the same products in both sectors is key if you are expecting consumers to fully understand the benefits of taking a second charge mortgage and want brokers to be able run price comparisons between a remortgage, a second charge and a further advance.

The days of offering a variable rate because that is the only option are long since passed and it’s great to see the majority of lenders adopting this approach. There are so many more product options available nowadays than there were pre-credit crunch, with lenders offering base rate trackers, fixed rate options and SVR’s. Rates are also much lower, no longer are we talking about rates of 7% plus, the prime rates we are looking at now are in the four or five per cent bracket, much closer to those in the first charge market.

With the MCD a mere four months away the sector will also benefit from the same processes as its bigger brother the first charge market. The days of talking to a mortgage intermediary who knows their own job inside out but is then made to try and understand a completely different process that he or she then needs to educate their client on will be put behind us.

I believe technology will play a major part moving forward and it is great to see that the majority of lenders have finally dug deep and invested in systems that are fit for purpose. We need to see that investment if we are going to take the sector forward. The customer journey is so important and technology is always going to play a huge part in making that journey the best it can be, without of course, ever losing that human touch that mortgage intermediaries and master brokers can give.

You never know, we may even start to see an amalgamation of lenders in the same categories from both first and second charges in years to come in the prestigious Mortgage Strategy Awards, now that would be a real move for the sector into the big time!