The Intermediary – March 2025 - Flipbook - Page 61
S E C O N D C H A RG E
Opinion
Second charge
lending and tech
transformation
T
he second charge
mortgage market is in
the midst of significant
growth, presenting
both opportunities
and challenges for the
intermediary market.
Recent analysis by Pepper Money
suggests that more than 42,000
households could take out a second
charge loan this year. If this growth
trajectory plays out as expected, the
sector will have expanded by nearly
39% over two years, reflecting a
rising appetite. Data collected from
the OMS end of year figures also
shows an increase in second charge
completions through the intermediary
market, with second charge lending
accounting for 10.65% of all lending
through OMS in 2024, increasing
from 9.17% in 2023.
In addition, recent data from the
Finance & Leasing Association (FLA)
showed that new second charge
mortgage business volumes grew by
17% in November 2024, with the value
of new loans increasing by 29%. In
the three months to November, there
were reported to be 9,686 agreements
totalling £476m, up 26% by volume
and 35% by value compared with the
same quarter in 2023.
On an annual basis, second charge
lending rose 16% by number and 22%
by value in the 12 months to November
compared with the previous year.
This lending surge underlines
its growing importance within
the broader mortgage landscape,
particularly as homeowners explore
alternative borrowing options.
Gaining popularity
Second charge mortgages are
increasingly being used as a viable
alternative to remortgaging, especially
for homeowners locked into highly
competitive longer-term fixed
rate deals.
Many borrowers are now seeking
second charge loans for purposes
ranging from debt consolidation
to funding home improvements,
rather than incurring the costs and
potential rate increases associated with
remortgaging. This trend is bolstered
by increasing consumer awareness
of second charge solutions, and the
flexibility they offer in managing
existing financial commitments.
Additionally, the Financial Conduct
Authority (FCA) has recently
reinforced the need for quality
advice in second charge lending. The
regulator highlighted concerns about
some firms failing to fully assess
whether a secured loan is appropriate
for customers in financial difficulty.
Under the Consumer Duty
framework, intermediaries are
expected to ensure their clients
understand the full implications of
second charge borrowing, including
repayment costs and long-term
affordability.
This further highlights the critical
role of brokers in educating and
guiding clients through their options
and making informed decisions.
Streamlined solutions
As the second charge market expands,
tech solutions and platforms are
helping to streamline application
workflows, reducing manual
processes, and enabling brokers to
source the most suitable products for
their clients more effectively.
OMS has launched a pilot for
Second Charges Quick Quote, an
instant sourcing platform designed to
enhance efficiencies across the second
charge mortgage sector. The pilot,
in collaboration with Pepper Money,
Selina Finance and Interbridge, aims
NEAL JANNELS
is managing director at One
Mortgage System
Second charge
mortgages are
increasingly being used
as a viable alternative to
remortgaging”
to refine the platform ahead of a full
industry rollout.
This platform allows brokers
to receive instant lender quotes,
providing real-time comparisons
without the need for a full decision in
principle (DIP).
This innovation significantly
reduces the time required to research
and source second charge mortgage
options, ultimately delivering beer
value and a smoother experience for
both brokers and their clients.
The future
Looking ahead, the second charge
sector is well-positioned to build on its
impressive growth trajectory.
With an increasing number of
lenders showcasing innovation and
adaptability in response to shiing
market conditions, second charge
loans will continue to be a valuable
tool for intermediaries, enabling them
to offer competitive and responsible
lending solutions.
Technology will play an
increasingly prominent role in this
evolution, by further enhancing
the client journey and helping
intermediaries position themselves
as trusted advisers in a progressively
complex mortgage landscape. ●
March 2025 | The Intermediary
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