Second charge market resilient to Brexit and MCD, says report

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The Brexit vote and MCD aftermath have failed to dent second charge lending volumes, according to a report from specialist master broker Enterprise Finance.

Drawing on data from the Finance and Leasing Association, the report studies the aftermath of both the vote and the European directive on the industry.

The report states: “With falls in available interest rates being a feature of the market over the summer, second charges became more attractive options in July and August, and this will continue as rates below 4 per cent have arrived on the market.”

The FLA results out last month found that the total value of monthly second charge lending increased by 4 per cent in the month to July to reach £73m, with the same volume of lending seen in August, representing a 6 per cent rise on August last year.

Enterprise Finance sales director Harry Landy says: “It remains to be seen what the full impact of the vote to leave the EU will be on the second charge market, and the property market as a whole. Nevertheless, second charge lending actually increased between June and August, and data from the Council of Mortgage Lenders showed a similar growth in the level of remortgaging in that period, reinforced by the Bank of England’s latest data release.

“While would-be buyers may well be less inclined to purchase, homeowners have clearly not been deterred from accessing some of the excellent rates on the market – whether for second charge or remortgage borrowing.

“The Referendum’s fallout hasn’t come close to that of the last recession, which caused a severe liquidity crisis and a huge tightening of risk appetites. Since the vote we have seen deals continuing to go through un-impeded – which the latest data from the FLA backs up.”

He adds that lenders “were able to come back swiftly from MCD, with gross lending seeing a sharp increase in May as a result of pipelines being rebuilt”.