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Second charge boom predicted

The mortgage market could see a proliferation of second charge loans arranged by brokers come regulation, warns BM Solutions.

Speaking at the Mortgage Expo seminar on non-conforming loans, Michael Bolton, director of mortgages at BM Solutions, said this increase might come about as brokers will not have to disclose procuration fees on the deals when regulation comes into effect, and that this shift could displace the boom in remortgages.

But John Stewart, director of Basildon-based PMI Independent Financial Advisers, says: “I would be surprised if this happened. The whole point of regulation is to get rid of the brokers who would offer bad advice just for the procuration fees. The market is being cleaned up dramatically but if the FSA creates loopholes some brokers will always exploit them.”

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Table 1: Gross mortgage lending in 2001

Mortgage channel Gross lending (bn) Market share Total gross lending £160.3 100% Total retail £88.2 55% Branch £76.9 48% Web, mail, phone £11.2 7% Total wholesale £72.1 45% Total mortgage intermediary £62.5 39% Online mortgageiIntermediary £31.3 19.5% Tied adviser £9.6 6% Sources: TowerGroup estimates, Council of Mortgage Lenders, European Mortgage Federation

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