"March saw the second charge mortgage market report its highest level of new business so far this year and the first quarter ended with new business volumes only 5% lower than in Q1 2022."
Second charge mortgage lending totalled £123m in March, a 12% decrease compared to the same month in 2022, according to the latest figures from the Finance & Leasing Association (FLA).
In the first quarter of 2023 lending totalled £333m, down 5% on Q1 2022.
However, in the 12 months to March, lending of £1,541m is 24% higher than in the preceding 12 months.
By volume, the number of agreements was 2,745 in March, down 10% year-on-year, while quarterly volumes were down 5% and annual volumes remain 17% higher.
Fiona Hoyle, director of consumer and mortgage finance and inclusion at the FLA, said: “March saw the second charge mortgage market report its highest level of new business so far this year and the first quarter ended with new business volumes only 5% lower than in Q1 2022.
"The distribution by purpose of loan in March showed 58% of new agreements were for the consolidation of existing loans, 14% for home improvements, and a further 22% for both loan consolidation and home improvements.”
Nick Jones, director of Freedom 4 Intermediaries, commented: “Second charge mortgage new business fell in March but 12-month volumes are up substantially following extremely strong demand last year. With March recording the highest level of new business in the second charge market this calendar year, it looks like demand is returning as we approach the end of the Bank of England’s interest rate hiking cycle.
“Second charge mortgages remain an attractive proposition for many homeowners who are exploring the most appropriate way to raise capital to consolidate debt, finance home improvements or achieve a wide variety of aspirations through the equity they have accumulated in their property. Given fixed rate mortgages have more or less tripled over the past 18 months, remortgaging may no longer be a viable option for people on low fixed-term rates which could provide a tailwind for the second charge market over the coming months.
“While second charge mortgage rates have risen – as they have throughout the secured and unsecured lending sector – shopping around between different providers is vital for borrowers and intermediaries to secure the products that will be most appropriate to meet individual circumstances and objectives.”
